Document:

Exhibit
4.3

 

 

 

CREDIT AGREEMENT

 

dated as of

 

August 13, 2010,

 

among

 

ENERGYSOLUTIONS, INC.,

 

ENERGYSOLUTIONS, LLC,

as the Borrower,

 

The Lenders Party Hereto

 

and

 

JPMORGAN CHASE BANK, N.A.,

as the Administrative Agent

 

 

 

CREDIT SUISSE AG

and

CITIBANK, N.A.,

as Syndication Agents

 

J.P. MORGAN SECURITIES INC.,

CREDIT SUISSE SECURITIES (USA) LLC

and

CITIGROUP GLOBAL MARKETS INC.,

as
Joint Lead Arrangers and Joint Bookrunners

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I Definitions

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Defined Terms

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.2

  	
  Terms Generally

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 1.3

  	
  Accounting Terms

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 1.4

  	
  Pro Forma Calculations

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 1.5

  	
  Currency Translation

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE II The Credits

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Commitments and Loans

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 2.2

  	
  Manner of Borrowing and Disbursement

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 2.3

  	
  Requests for Borrowings

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 2.4

  	
  Funding of Borrowings

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 2.5

  	
  Interest Elections

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 2.6

  	
  Letters of Credit

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 2.7

  	
  Interest

  	
  51

  
	
   

  	
   

  	
   

  
	
  Section 2.8

  	
  Repayment of Loans; Amortization

  	
  52

  
	
   

  	
   

  	
   

  
	
  Section 2.9

  	
  Fees

  	
  53

  
	
   

  	
   

  	
   

  
	
  Section 2.10

  	
  Optional Prepayments

  	
  54

  
	
   

  	
   

  	
   

  
	
  Section 2.11

  	
  Mandatory Prepayment of Loans

  	
  54

  
	
   

  	
   

  	
   

  
	
  Section 2.12

  	
  Evidence of Debt; Notes

  	
  56

  
	
   

  	
   

  	
   

  
	
  Section 2.13

  	
  Payments Generally; Term Loan Call Protection

  	
  56

  
	
   

  	
   

  	
   

  
	
  Section 2.14

  	
  Break Funding Payments

  	
  58

  
	
   

  	
   

  	
   

  
	
  Section 2.15

  	
  Payments; Pro Rata Treatment; Sharing of Setoffs

  	
  58

  
	
   

  	
   

  	
   

  
	
  Section 2.16

  	
  Increased Costs

  	
  59

  
	
   

  	
   

  	
   

  
	
  Section 2.17

  	
  Taxes

  	
  60

  
	
   

  	
   

  	
   

  
	
  Section 2.18

  	
  Increase in Commitments

  	
  64

  
	
   

  	
   

  	
   

  
	
  Section 2.19

  	
  Termination and Reduction of Commitments and Deposit L/C
  Specified Amount

  	
  66

  
	
   

  	
   

  	
   

  
	
  Section 2.20

  	
  Mitigation Obligations; Replacement of Lenders

  	
  67

  
	
   

  	
   

  	
   

  
	
  Section 2.21

  	
  Defaulting Lenders

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE III Conditions
  Precedent

  	
  71

  
	
   

  	
   

  
	
  Section 3.1

  	
  Closing Date

  	
  71

  
	
   

  	
   

  	
   

  
	
  Section 3.2

  	
  Each Credit Event

  	
  74

  

 

i

 

	
  ARTICLE IV Representations
  and Warranties

  	
  75

  
	
   

  	
   

  
	
  Section 4.1

  	
  Organization; Ownership; Power; Qualification

  	
  75

  
	
   

  	
   

  	
   

  
	
  Section 4.2

  	
  Authorization; Enforceability

  	
  75

  
	
   

  	
   

  	
   

  
	
  Section 4.3

  	
  Subsidiaries and Joint Ventures

  	
  75

  
	
   

  	
   

  	
   

  
	
  Section 4.4

  	
  Consents; Conflicts; Liens

  	
  76

  
	
   

  	
   

  	
   

  
	
  Section 4.5

  	
  Business

  	
  76

  
	
   

  	
   

  	
   

  
	
  Section 4.6

  	
  Necessary Authorizations

  	
  76

  
	
   

  	
   

  	
   

  
	
  Section 4.7

  	
  Compliance with Law

  	
  76

  
	
   

  	
   

  	
   

  
	
  Section 4.8

  	
  Title to Assets

  	
  76

  
	
   

  	
   

  	
   

  
	
  Section 4.9

  	
  Litigation

  	
  77

  
	
   

  	
   

  	
   

  
	
  Section 4.10

  	
  Taxes

  	
  77

  
	
   

  	
   

  	
   

  
	
  Section 4.11

  	
  Financial Statements

  	
  77

  
	
   

  	
   

  	
   

  
	
  Section 4.12

  	
  No Material Adverse Change

  	
  78

  
	
   

  	
   

  	
   

  
	
  Section 4.13

  	
  ERISA

  	
  78

  
	
   

  	
   

  	
   

  
	
  Section 4.14

  	
  Compliance with Margin Regulations

  	
  78

  
	
   

  	
   

  	
   

  
	
  Section 4.15

  	
  Investment Company Act

  	
  79

  
	
   

  	
   

  	
   

  
	
  Section 4.16

  	
  Governmental Regulation

  	
  79

  
	
   

  	
   

  	
   

  
	
  Section 4.17

  	
  Absence of Defaults

  	
  79

  
	
   

  	
   

  	
   

  
	
  Section 4.18

  	
  Accuracy and Completeness of Information

  	
  79

  
	
   

  	
   

  	
   

  
	
  Section 4.19

  	
  Agreements with Affiliates

  	
  79

  
	
   

  	
   

  	
   

  
	
  Section 4.20

  	
  Collateral Matters

  	
  80

  
	
   

  	
   

  	
   

  
	
  Section 4.21

  	
  Indebtedness

  	
  81

  
	
   

  	
   

  	
   

  
	
  Section 4.22

  	
  Real Property

  	
  81

  
	
   

  	
   

  	
   

  
	
  Section 4.23

  	
  Intellectual Property

  	
  81

  
	
   

  	
   

  	
   

  
	
  Section 4.24

  	
  Patriot Act

  	
  81

  
	
   

  	
   

  	
   

  
	
  Section 4.25

  	
  Solvency

  	
  81

  
	
   

  	
   

  	
   

  
	
  Section 4.26

  	
  Environmental Matters

  	
  81

  
	
   

  	
   

  	
   

  
	
  Section 4.27

  	
  Employee Relations

  	
  83

  
	
   

  	
   

  	
   

  
	
  ARTICLE V General Covenants

  	
  84

  
	
   

  	
   

  
	
  Section 5.1

  	
  Preservation of Existence and Similar Matters

  	
  84

  
	
   

  	
   

  	
   

  
	
  Section 5.2

  	
  Business; Compliance with Applicable Law

  	
  84

  
	
   

  	
   

  	
   

  
	
  Section 5.3

  	
  Maintenance of Properties

  	
  84

  
	
   

  	
   

  	
   

  
	
  Section 5.4

  	
  Accounting Methods and Financial Records

  	
  84

  
	
   

  	
   

  	
   

  
	
  Section 5.5

  	
  Insurance

  	
  85

  

 

ii

 

	
  Section 5.6

  	
  Payment of Taxes and Claims

  	
  85

  
	
   

  	
   

  	
   

  
	
  Section 5.7

  	
  Visits and Inspections

  	
  85

  
	
   

  	
   

  	
   

  
	
  Section 5.8

  	
  Payment of Indebtedness

  	
  86

  
	
   

  	
   

  	
   

  
	
  Section 5.9

  	
  Use of Proceeds

  	
  86

  
	
   

  	
   

  	
   

  
	
  Section 5.10

  	
  Real Estate

  	
  86

  
	
   

  	
   

  	
   

  
	
  Section 5.11

  	
  Interest Rate Hedging

  	
  86

  
	
   

  	
   

  	
   

  
	
  Section 5.12

  	
  Covenants Regarding Formation of Subsidiaries and the
  Making of Acquisitions

  	
  87

  
	
   

  	
   

  	
   

  
	
  Section 5.13

  	
  Deposit Accounts

  	
  87

  
	
   

  	
   

  	
   

  
	
  Section 5.14

  	
  Further Assurances

  	
  87

  
	
   

  	
   

  	
   

  
	
  Section 5.15

  	
  Maintenance of Ratings

  	
  88

  
	
   

  	
   

  	
   

  
	
  Section 5.16

  	
  Environmental Compliance

  	
  88

  
	
   

  	
   

  	
   

  
	
  Section 5.17

  	
  Certain Post-Closing Collateral Obligations

  	
  89

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI Information
  Covenants

  	
  89

  
	
   

  	
   

  
	
  Section 6.1

  	
  Quarterly Statements and Information

  	
  89

  
	
   

  	
   

  	
   

  
	
  Section 6.2

  	
  Annual Financial Statements and Information

  	
  90

  
	
   

  	
   

  	
   

  
	
  Section 6.3

  	
  Performance Certificates

  	
  90

  
	
   

  	
   

  	
   

  
	
  Section 6.4

  	
  Other Reports and Notices

  	
  91

  
	
   

  	
   

  	
   

  
	
  Section 6.5

  	
  Notice of Litigation and Other Matters

  	
  93

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII Negative
  Covenants

  	
  94

  
	
   

  	
   

  
	
  Section 7.1

  	
  Limitation on Indebtedness; Derivative Contracts

  	
  94

  
	
   

  	
   

  	
   

  
	
  Section 7.2

  	
  Limitation on Liens

  	
  97

  
	
   

  	
   

  	
   

  
	
  Section 7.3

  	
  Amendment of Material Documents

  	
  97

  
	
   

  	
   

  	
   

  
	
  Section 7.4

  	
  Liquidation, Merger, Consolidation, Disposition of Assets

  	
  97

  
	
   

  	
   

  	
   

  
	
  Section 7.5

  	
  Investments and Acquisitions

  	
  98

  
	
   

  	
   

  	
   

  
	
  Section 7.6

  	
  Financial Covenants

  	
  102

  
	
   

  	
   

  	
   

  
	
  Section 7.7

  	
  Affiliate Transactions; Restricted Payments; Restricted
  Debt Payments

  	
  103

  
	
   

  	
   

  	
   

  
	
  Section 7.8

  	
  ERISA Liabilities

  	
  105

  
	
   

  	
   

  	
   

  
	
  Section 7.9

  	
  Limitation on Preferred Stock

  	
  105

  
	
   

  	
   

  	
   

  
	
  Section 7.10

  	
  Negative Pledge

  	
  105

  
	
   

  	
   

  	
   

  
	
  Section 7.11

  	
  Payment Restrictions Affecting Subsidiaries

  	
  106

  
	
   

  	
   

  	
   

  
	
  Section 7.12

  	
  Speculative Transactions

  	
  106

  
	
   

  	
   

  	
   

  
	
  Section 7.13

  	
  Name, Jurisdiction of Organization; Business; Fiscal Year

  	
  106

  
	
   

  	
   

  	
   

  
	
  Section 7.14

  	
  Permitted Activities

  	
  106

  

 

iii

 

	
  Section 7.15

  	
  Maximum Capital Expenditures

  	
  107

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII Events of
  Default

  	
  108

  
	
   

  	
   

  
	
  Section 8.1

  	
  Events of Default

  	
  108

  
	
   

  	
   

  	
   

  
	
  Section 8.2

  	
  Remedies

  	
  111

  
	
   

  	
   

  	
   

  
	
  Section 8.3

  	
  Required Consents and Transfer of Licenses Upon Event of
  Default

  	
  111

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX The
  Administrative Agent

  	
  112

  
	
   

  	
   

  
	
  ARTICLE X Miscellaneous

  	
  116

  
	
   

  	
   

  
	
  Section 10.1

  	
  Notices

  	
  116

  
	
   

  	
   

  	
   

  
	
  Section 10.2

  	
  Expenses; Indemnity; Damage Waiver

  	
  117

  
	
   

  	
   

  	
   

  
	
  Section 10.3

  	
  Setoff

  	
  119

  
	
   

  	
   

  	
   

  
	
  Section 10.4

  	
  Successors and Assigns

  	
  119

  
	
   

  	
   

  	
   

  
	
  Section 10.5

  	
  Counterparts; Integration; Effectiveness

  	
  122

  
	
   

  	
   

  	
   

  
	
  Section 10.6

  	
  Governing Law and Jurisdiction

  	
  123

  
	
   

  	
   

  	
   

  
	
  Section 10.7

  	
  Severability

  	
  123

  
	
   

  	
   

  	
   

  
	
  Section 10.8

  	
  Interest

  	
  124

  
	
   

  	
   

  	
   

  
	
  Section 10.9

  	
  Table of Contents and Headings

  	
  124

  
	
   

  	
   

  	
   

  
	
  Section 10.10

  	
  Amendments and Waivers

  	
  124

  
	
   

  	
   

  	
   

  
	
  Section 10.11

  	
  Release of Liens and Guarantees

  	
  126

  
	
   

  	
   

  	
   

  
	
  Section 10.12

  	
  Other Relationships

  	
  126

  
	
   

  	
   

  	
   

  
	
  Section 10.13

  	
  Directly or Indirectly

  	
  126

  
	
   

  	
   

  	
   

  
	
  Section 10.14

  	
  Reliance on and Survival of Various Provisions

  	
  126

  
	
   

  	
   

  	
   

  
	
  Section 10.15

  	
  Senior Debt

  	
  127

  
	
   

  	
   

  	
   

  
	
  Section 10.16

  	
  Confidentiality

  	
  127

  
	
   

  	
   

  	
   

  
	
  Section 10.17

  	
  Patriot Act Notice

  	
  128

  
	
   

  	
   

  	
   

  
	
  Section 10.18

  	
  Non-Public Information

  	
  128

  
	
   

  	
   

  	
   

  
	
  Section 10.19

  	
  Conversion of Currencies

  	
  129

  
	
   

  	
   

  	
   

  
	
  Section 10.20

  	
  WAIVER OF JURY TRIAL

  	
  129

  
	
   

  	
   

  	
   

  
	
  Section 10.21

  	
  No Fiduciary Relationship

  	
  130

  

 

iv

 

	
  EXHIBITS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of
  Assignment and Assumption

  	
   

  
	
  Exhibit B

  	
  -

  	
  Form of
  Borrowing Request

  	
   

  
	
  Exhibit C

  	
  -

  	
  Form of
  Guarantee and Collateral Agreement

  	
   

  
	
  Exhibit D

  	
  -

  	
  Form of
  Interest Election Request

  	
   

  
	
  Exhibit E

  	
  -

  	
  Form of
  Loan Certificate

  	
   

  
	
  Exhibit F

  	
  -

  	
  Form of
  Promissory Note

  	
   

  
	
  Exhibit G

  	
  -

  	
  Form of
  Perfection Certificate

  	
   

  
	
  Exhibit H

  	
  -

  	
  Form of
  Performance Certificate

  	
   

  
	
  Exhibit I

  	
  -

  	
  Form of
  Subordination Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  2.1

  	
  -

  	
  Commitments

  	
   

  
	
  Schedule
  2.6

  	
  -

  	
  Existing
  Letters of Credit

  	
   

  
	
  Schedule
  4.3A

  	
  -

  	
  Subsidiaries
  and Joint Ventures

  	
   

  
	
  Schedule
  4.3B

  	
  -

  	
  Voting
  Restrictions

  	
   

  
	
  Schedule
  4.4

  	
  -

  	
  Consents;
  Conflicts; Liens

  	
   

  
	
  Schedule
  4.6

  	
  -

  	
  Licenses;
  Necessary Authorizations

  	
   

  
	
  Schedule
  4.9

  	
  -

  	
  Litigation

  	
   

  
	
  Schedule
  4.10

  	
  -

  	
  Taxes;
  Other Liabilities

  	
   

  
	
  Schedule
  4.16

  	
  -

  	
  Governmental
  Regulation

  	
   

  
	
  Schedule
  4.19

  	
  -

  	
  Agreements
  with Affiliates

  	
   

  
	
  Schedule
  4.22

  	
  -

  	
  Real
  Property; Mortgaged Properties

  	
   

  
	
  Schedule
  4.27

  	
  -

  	
  Employee
  Relations

  	
   

  
	
  Schedule
  5.17 

  	
  -

  	
  Post-Closing
  Collateral Obligations

  	
   

  
	
  Schedule
  7.1

  	
  -

  	
  Existing
  Indebtedness

  	
   

  
	
  Schedule
  7.2

  	
  -

  	
  Existing
  Liens

  	
   

  
	
  Schedule
  7.5

  	
  -

  	
  Existing
  Investments

  	
   

  

 

v

 

CREDIT
AGREEMENT dated as of August 13, 2010 (this “Agreement”), among
ENERGYSOLUTIONS, INC., a Delaware
corporation (“Parent”), ENERGYSOLUTIONS, LLC,
a Utah limited liability company (“EnergySolutions”), as the Borrower,
the LENDERS party hereto and JPMORGAN CHASE BANK, N.A., as the Administrative
Agent.

 

WHEREAS,
Parent and EnergySolutions desire to enter into financing transactions pursuant
to which (a) EnergySolutions will obtain senior secured credit facilities
consisting of (i) Term Loans (such term and each other capitalized term
used but not otherwise defined herein having the meaning assigned to it in Article I)
in U.S. Dollars in an aggregate principal amount of $560,000,000 ($310,000,000
of the proceeds of which shall be used to cash collateralize EnergySolutions’
reimbursement obligations in respect of Deposit Letters of Credit) and (ii) Revolving
Loans in U.S. Dollars and Revolving Letters of Credit in U.S. Dollars and
Available Foreign Currencies in an aggregate principal or face amount not exceeding
the equivalent of $105,000,000 and (b) Parent and EnergySolutions will
issue Senior Notes in an aggregate principal amount of $300,000,000;

 

WHEREAS,
Parent and EnergySolutions desire to consummate the transactions contemplated
by the Zion Agreements, which provide, among other things, for the acquisition
by ZionSolutions, a wholly owned Subsidiary of EnergySolutions, of certain
assets relating to the Zion Energy Center, Units 1 and 2, located in Zion, Illinois
(the “Zion Acquisition”) from Exelon Generation Company, LLC (“Exelon”);
and

 

WHEREAS,
the proceeds of the senior secured credit facilities referred to above will be
used as follows: (a) $250,000,000 of the proceeds of the Term Loans will
be used to refinance Indebtedness of EnergySolutions and Duratek, Inc., a
wholly owned Subsidiary of EnergySolutions (“Duratek”), outstanding
under the Existing Credit Agreements, (b) $310,000,000 of the proceeds of
the Term Loans will be deposited in the Deposit L/C Escrow Account for the
purpose of cash collateralizing EnergySolutions’ reimbursement obligations to
the Deposit Issuing Banks in respect of Deposit Letters of Credit, (c) the
proceeds of the Revolving Loans and drawings under the Revolving Letters of
Credit will be used for working capital and other general corporate purposes
and (d) the Deposit Letters of Credit will replace synthetic letters of
credit issued under the Existing Credit Agreements and will provide credit
support for the obligations of Parent and EnergySolutions under the Zion
Agreements.

 

NOW, THEREFORE, the Lenders and the Issuing
Banks are willing to make such loans and issue such letters of credit to or for
the account of EnergySolutions on the terms and subject to the conditions set
forth herein.  Accordingly, in
consideration of the premises and the agreements herein contained, the parties
hereto agree as follows:

 

 

ARTICLE I

 

Definitions

 

SECTION 1.1  Defined Terms.  For the purposes hereof, the following terms
shall have the following meanings:

 

“Accession
Agreement” shall have the meaning set forth in Section 2.18(g).

 

“Acquisition”
shall mean (whether by purchase, exchange, issuance of capital stock, limited
partnership interests, general partnership interests or other equity or debt
securities, merger, reorganization or any other method) (a) any
acquisition by Parent, EnergySolutions or any of their respective Subsidiaries
of all or substantially all of the Equity Interests in any other Person, which
Person shall then become consolidated with EnergySolutions or any of its Subsidiaries
in accordance with GAAP, or (b) any acquisition by Parent, EnergySolutions
or any of their respective Subsidiaries of all or substantially all of the
assets of any other Person; provided that Acquisition shall not mean or
include any Real Property Acquisition.

 

“Acquisition
Entity” shall mean, in respect of any Acquisition of any Person,
collectively, and on a consolidated basis, such Person and all subsidiaries and
other Affiliates of such Person, if any, that are acquired with such Person, in
one transaction or a series of two or more related transactions.

 

“Additional
Permitted Debt” shall mean Indebtedness of EnergySolutions that (a) is
unsecured, (b) other than in the case of Indebtedness incurred pursuant to
Section 7.1(u), is not guaranteed by Parent or any of its Subsidiaries, (c) matures
no earlier than 180 days after the Term Maturity Date, (d) requires no
payment of principal (whether by way of scheduled amortization, mandatory
redemption, mandatory prepayment, sinking fund or otherwise) to be made prior
to its maturity date (except after such Indebtedness has been accelerated as a
result of the occurrence of an event of default thereunder), provided
that in the case of Indebtedness incurred pursuant to Section 7.1(u), the
terms of such Indebtedness may require redemptions or offers to purchase upon
asset sales and change of control events on customary terms, and (e) does
not require Parent, EnergySolutions or any of their respective Subsidiaries to
maintain any specified financial condition.

 

“Adjusted
Eurodollar Rate” shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to (a) the Eurodollar Rate for such
Interest Period multiplied by (b) a fraction (expressed as a decimal) the
numerator of which is the number one and the denominator of which is the number
one minus the Eurodollar Reserve Percentage; provided that,
notwithstanding the foregoing, the Adjusted Eurodollar Rate, when used in
reference to any Term Borrowing, or the Loans comprising any such Borrowing,
shall at no time be less than 1.75% per annum.

 

“Administrative
Agent” shall mean JPMorgan Chase Bank, N.A., in its capacity as
administrative agent hereunder and under the other Loan Documents, and its
successors in such capacity as provided in Article IX.

 

2

 

“Administrative
Questionnaire” shall mean an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

“Affiliate”
shall mean, with respect to a specified Person, any other Person directly or
indirectly Controlling, Controlled by, or under common Control with, the Person
specified; provided, however, that for purposes of
Sections 4.19 and 7.7, the term “Affiliate” shall also mean any Person
that is a director or an executive officer of the Person specified, any Person
that directly or indirectly beneficially owns Equity Interests in the Person
specified representing 10% or more of the aggregate ordinary voting power or
the aggregate equity value represented by the issued and outstanding Equity
Interests in the Person specified and any Person that would be an Affiliate of
any such beneficial owner pursuant to this definition (but without giving effect
to this proviso).  Unless the context
otherwise requires, “Affiliate” shall mean an Affiliate of Parent and shall
include its Subsidiaries.

 

“Aggregate
Revolving Commitment” shall mean the sum of the Revolving Commitments of
all the Revolving Lenders.

 

“Aggregate
Revolving Exposure” shall mean the sum of the Revolving Exposures of all
the Revolving Lenders.

 

“Agreement”
shall have the meaning set forth in the preamble hereto.

 

“Agreement
Currency” shall have the meaning set forth in Section 10.19(b).

 

“Alternate
Base Rate” shall mean, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds
Rate in effect on such day plus 1⁄2 of 1% and (c) the Adjusted Eurodollar
Rate on such day (or if such day is not a Business Day, the immediately
preceding Business Day) for a deposit in U.S. Dollars with a maturity of one
month plus 1%; provided that, notwithstanding the foregoing, the
Alternate Base Rate, when used in reference to any Term Borrowing, or the Loans
comprising any such Borrowing, shall at no time be less than 2.75% per
annum.  For purposes of clause (c) above,
the Adjusted Eurodollar Rate on any day shall be based on the rate per annum
appearing on the Reuters “LIBOR01” screen displaying British Bankers’
Association Interest Settlement Rates (or on any successor or substitute screen
provided by Reuters, or any successor to or substitute for such service,
providing rate quotations comparable to those currently provided on such
screen, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to U.S. Dollar
deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to such day for deposits in U.S. Dollars
with a maturity of one month.  Any change
in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds
Rate or the Adjusted Eurodollar Rate shall be effective from and including the
effective date of such change in the Prime Rate, the Federal Funds Rate or the
Adjusted Eurodollar Rate, respectively.

 

“Applicable
Creditor” shall have the meaning set forth in Section 10.19(b).

 

“Applicable
Law” shall mean, in respect of any Person, all provisions of constitutions,
statutes, rules, regulations and orders of any Governmental Authority
applicable to such Person, including the Licenses, all Environmental Laws and
all orders, decisions, judgments and decrees 

 

3

 

of
all courts and arbitrators in proceedings or actions to which such Person is a
party or by which such Person is bound.

 

“Applicable
Margin” shall mean, for any day, (a) with respect to any Term Loan, (i) 3.50%
per annum, in the case of a Base Rate Loan, or (ii) 4.50% per annum, in
the case of a Eurodollar Loan, and (b) with respect to any Revolving Loan,
(i) 3.50% per annum, in the case of a Base Rate Loan, or (ii) 4.50%
per annum, in the case of a Eurodollar Loan.

 

“Applicable
Section 7.1(u) Prepayment Percentage” shall mean, on any date of
incurrence of Additional Permitted Debt pursuant to Section 7.1(u), (a) 100%
if the Leverage Ratio as of such date shall be (i) equal to or greater
than 2.75:1.00 on a pro forma basis after giving effect thereto and to any
concurrent prepayment of Loans required by Section 7.1(u) or
(ii) less than 2.75:1.00 but any lesser prepayment of Loans contemplated
by clause (b) below would not result in a Leverage Ratio less than
2.75:1.00, and (b) 50% if the Leverage Ratio as of such date shall be less
than 2.75:1.00 on a pro forma basis after giving effect thereto and to any
concurrent prepayment of Loans required by Section 7.1(u), in each case,
assuming the relevant period for the determination of Consolidated Adjusted
EBITDA for purposes of calculation of the Leverage Ratio is the four
consecutive fiscal quarter period ending on the Latest Financial Reporting
Date.

 

“Approved
Fund” shall mean any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in commercial loans and similar
extensions of credit in the ordinary course and that is administered or managed
by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity
or an Affiliate of an entity that administers or manages a Lender.

 

“Arranger”
shall mean each of J.P. Morgan Securities Inc., Credit Suisse Securities (USA)
LLC and Citigroup Global Markets Inc., in its capacity as a joint lead arranger
and joint bookrunner for the credit facilities established under this
Agreement.

 

“Assignment
and Assumption” shall mean an assignment and assumption, substantially in
the form of Exhibit A, entered into by a Lender and an Eligible Assignee,
with the consent of any Person whose consent is required under
Section 10.4(b).

 

“Authorized
Signatory” shall mean such officers of each Loan Party or, with respect to
certain limited liability companies or partnerships that do not have officers,
such managers, managing members or general partners thereof, in each case as
may be duly authorized and designated in writing to the Administrative Agent by
such Loan Party to execute documents, agreements and instruments on behalf of
such Loan Party.

 

“Available
Excess Cash Flow” shall mean, at any date of determination, the aggregate
amount of (a) 50% of Excess Cash Flow for the partial fiscal year of
Parent commencing on October 1, 2010 and ending on December 31, 2010
and (b) Excess Cash Flow for each full fiscal year thereafter ending prior
to such date of determination that, in each case, (i) was not and is not
required to be applied to the prepayment of Term Loans pursuant to Section 2.11
and (ii) has not been utilized on or prior to such date of determination
for Permitted Uses.

 

“Available
Foreign Currencies” shall mean Canadian Dollars, Euro, Sterling and such
other currencies as agreed to by the Administrative Agent and EnergySolutions.

 

4

 

“Bankruptcy
Event” shall mean, with respect to any Person, that such Person becomes the
subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, assignee for the benefit of creditors or
similar Person charged with the reorganization or liquidation of its business
or custodian appointed for it, or has taken any action in furtherance of, or
indicating its consent to, approval of or acquiescence in, any such proceeding
or appointment; provided that a Bankruptcy Event shall not result solely
by virtue of any ownership interest, or the acquisition of any ownership
interest, in such Person by a Governmental Authority or instrumentality
thereof; provided  further that such ownership interest does not
result in or provide such Person with immunity from the jurisdiction of courts
within the United States or from the enforcement of judgments or writs of
attachment on its assets or permit such Person (or such Government Authority or
instrumentality) to reject, repudiate, disavow or disaffirm any contracts or
agreements made by such Person.

 

“Base
Rate”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, shall bear interest at a
rate determined by reference to the Alternate Base Rate.

 

“Borrower”
shall mean EnergySolutions, LLC, a Utah limited liability company.

 

“Borrowing”
shall mean Loans of the same Class and Type made, converted or continued
on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.

 

“Borrowing
Request” shall mean a request by EnergySolutions for a Borrowing in accordance
with Section 2.3, which shall be, in the case of any such written request,
in the form of Exhibit B or any other form approved by the
Administrative Agent.

 

“Business
Day” shall mean any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar
Loan, the term “Business Day” shall also exclude any day on which banks are not
open for dealings in U.S. Dollar deposits in the London interbank market.

 

“Canadian
Dollars” shall mean the lawful currency of Canada.

 

“Capital
Expenditures” shall mean, for any period, without duplication, (a) the
additions to property, plant and equipment and other expenditures of Parent and
its consolidated Subsidiaries that are (or should be) set forth as capital
expenditures in a consolidated statement of cash flows of Parent and its
consolidated Subsidiaries for such period prepared in accordance with GAAP, (b) Real
Property Acquisitions during such period and (c) such portion of principal
payments on Capitalized Lease Obligations made by Parent and its consolidated
Subsidiaries during such period as is attributable to additions to property,
plant and equipment that have not otherwise been reflected on the consolidated
statement of cash flows as additions to property, plant and equipment; provided
that, solely for the purposes of Section 7.15, Capital Expenditures shall
not include any expenditures that (i) constitute Permitted Acquisitions, (ii) are
made with casualty insurance proceeds to the extent such proceeds are permitted
to be reinvested pursuant to the terms of this Agreement, (iii) are deemed
to occur by virtue of the trade-in or other 

 

5

 

exchange
of existing assets permitted under this Agreement, (iv) are made with the
cash proceeds of an asset disposition permitted under this Agreement to
purchase an asset or (v) are expenditures by any Special Purpose
Subsidiary.

 

“Capitalized
Lease Obligation” shall mean that portion of any obligation of a Person as
a lessee under a lease which is required to be capitalized on the balance sheet
of such lessee in accordance with GAAP.

 

“Cash
Equivalents” shall have the meaning set forth in Section 7.5(a).

 

“Cash
Interest Expense” shall mean, for any period, for Parent and its
Subsidiaries on a consolidated basis, interest expense during such period in
respect of Indebtedness for Money Borrowed (including any net obligations owing
under interest rate Derivative Contracts), as determined in accordance with
GAAP, that is payable in cash, and shall also include, without duplication, the
interest cash component during such period in respect of amounts payable under
Capitalized Lease Obligations, less interest income for such period that is
payable in cash.

 

“Change
in Law” shall mean the occurrence, after the date of this Agreement of any
of the following: (a) the adoption of any rule, regulation, treaty or
other law, (b) any change in any rule, regulation, treaty or other law or
in the administration, interpretation or application thereof by any
Governmental Authority or (c) the making or issuance of any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority; provided that with respect to any Lender or
Participant that shall have acquired its interest hereunder pursuant to an
assignment or a participation, a Change in Law shall be deemed to have occurred
only if such change shall have occurred after the date of such assignment or
participation, as applicable; provided  further that,
notwithstanding the foregoing, such Person shall be entitled to the benefits of
Section 2.16 to the same extent as the Person from whom it has acquired
such assignment or participation, as applicable.

 

“Change
of Control” shall mean (a) the acquisition of ownership by any Person
other than Parent of any Equity Interest in EnergySolutions; (b) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Exchange Act and the rules of
the SEC thereunder) of Equity Interests in Parent representing more than 35% of
either the aggregate ordinary voting power or the aggregate equity value
represented by the issued and outstanding Equity Interests in Parent; (c) persons
who were (i) directors of Parent on the date hereof, (ii) nominated
by the board of directors of Parent or (iii) appointed by directors who
were directors of Parent on the date hereof or were nominated as provided in
clause (ii) above, in each case other than any person whose initial
nomination or appointment occurred as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of one or more
directors on the board of directors of Parent (other than any such solicitation
made by the board of directors of Parent), ceasing to occupy a majority of the
seats (excluding vacant seats) on the board of directors of Parent; or (d) the
occurrence of a “Change of Control” as defined in the Senior Notes Documents or
any “change of control” (or similar event, however denominated) with respect to
Parent or EnergySolutions under and as defined in any indenture or other
agreement or instrument evidencing, governing the rights of the holders of or
otherwise relating to any Material Indebtedness of Parent, EnergySolutions or
any of their respective Subsidiaries or any preferred Equity Interests in
Parent.

 

6

 

“Citibank”
shall mean Citibank, N.A.

 

“Class”,
when used in reference to (a) any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Term Loans, Revolving
Loans, or to the extent such Loans have different terms and conditions than the
Term Loans, Incremental Term Loans, (b) any Commitment, refers to
whether such Commitment is a Term Commitment, a Revolving Commitment or an
Incremental Term Commitment and (c) any Lender, refers to whether such
Lender has a Loan or a Commitment of a particular Class.  Incremental Term Loans and Incremental Term
Commitments that have different terms and conditions shall constitute separate
Classes of Loans and Commitments.

 

“Closing Date” shall mean the date on which all the conditions
specified in Section 3.1 are satisfied (or waived in accordance with
Section 10.10).

 

“Code”
shall mean the Internal Revenue Code of 1986.

 

“Collateral”
shall mean any property of any kind on which Liens are purported to be created
in favor of the Administrative Agent, for itself and for the benefit of the
Secured Parties, as security for the Secured Obligations, pursuant to any of
the Security Documents.

 

“Collateral
and Guarantee Requirement” shall mean, at any time, the requirement that:

 

(a)           the Administrative Agent shall have
received from Parent, EnergySolutions and each of their respective Subsidiaries
(other than (A) any non-operating Subsidiary with total assets of less
than $1,000,000, (B) any Non-U.S. Subsidiary, (C) Zion Solutions or (D) any
other Special Purpose Subsidiary (but only to the extent that, and for so long
as, such other Special Purpose Subsidiary is prohibited by any Applicable Law,
including any order of any Governmental Authority, or by its organizational
documents or SPS Project Documentation from providing the Guarantees and
granting the Liens contemplated by the Guarantee and Collateral Agreement))
either (i) a counterpart of the Guarantee and Collateral Agreement duly
executed and delivered on behalf of such Person or (ii) in the case of any
Person that becomes a Subsidiary after the Closing Date (subject to any
additional exceptions set forth in Section 5.12(a)), a supplement to the
Guarantee and Collateral Agreement, in the form specified therein, duly
executed and delivered on behalf of such Person, together with documents and
opinions of the type referred to in clauses (b) and (e) of Section 3.1
with respect to such Person; provided that each Domestic DRE shall
execute and deliver such counterpart of or supplement to the Guarantee and
Collateral Agreement solely as a “Grantor” and not as a “Guarantor” thereunder.

 

(b)           all Equity Interests in any
Subsidiary owned by or on behalf of any Loan Party or Domestic DRE shall have
been pledged pursuant to the Guarantee and Collateral Agreement and, in the
case of Equity Interests in any Non-U.S. Subsidiary where the Administrative
Agent so requests in connection with the pledge of such Equity Interests, a
Foreign Pledge Agreement, provided that the applicable Loan Party or Domestic
DRE, as the case may be, shall not be required to pledge (i) the Equity
Interest of ZionSolutions, (ii) the Equity Interests of any other Special
Purpose Subsidiary to the extent that, and for so long as, such pledge is
prohibited by any Applicable Law, including any order of any Governmental Authority,
or by the organizational 

 

7

 

documents or SPS Project
Documentation of such other Special Purpose Subsidiary, (iii) the Equity
Interests acquired after the Closing Date in any joint venture that becomes a
Subsidiary as a result of such acquisition, if and for so long as such pledge
is prohibited by the organizational or membership documents of such joint
venture and such prohibition was not agreed to in contemplation of such
acquisition and (iv) more than 65% of the outstanding voting Equity
Interests of any Subsidiary that is a “first tier” Non-U.S. Subsidiary (provided
that such pledge shall not be required to the extent it is prohibited under the
laws of the jurisdiction of organization of such Non-U.S. Subsidiary), and the
Administrative Agent shall, to the extent required by the Guarantee and
Collateral Agreement, have received certificates or other instruments
representing all such Equity Interests, together with undated stock powers or
other instruments of transfer with respect thereto endorsed in blank;

 

(c)           (i) all Indebtedness of Parent,
EnergySolutions and each of their respective Subsidiaries and (ii) all
Indebtedness of any other Person (other than Cash Equivalents held in book
entry form or securities accounts) in a principal amount of $1,000,000 or more
that, in each case, is owing to any Loan Party shall be evidenced by a
promissory note and shall have been pledged pursuant to the Guarantee and
Collateral Agreement, and the Administrative Agent shall have received all such
promissory notes, together with undated instruments of transfer with respect
thereto endorsed in blank;

 

(d)           all documents and instruments,
including Uniform Commercial Code financing statements, required by applicable
law or reasonably requested by the Administrative Agent to be filed, registered
or recorded to create the Liens intended to be created by the Security
Documents and perfect such Liens to the extent required by, and with the
priority required by, the Security Documents, shall have been filed, registered
or recorded or delivered to the Administrative Agent for filing, registration
or recording;

 

(e)           the Administrative Agent shall have
received (i) counterparts of a Mortgage with respect to each Mortgaged
Property duly executed and delivered by the record owner or lessee of such
Mortgaged Property, (ii) a Mortgage Policy issued by a nationally
recognized title insurance company insuring the Lien of each such Mortgage as a
valid and enforceable first priority Lien on the Mortgaged Property described
therein, free of any other Liens except Permitted Liens, together with such
endorsements (but specifically excluding creditors’ rights endorsements),
coinsurance and reinsurance as the Administrative Agent may reasonably request,
(iii) if improvements located upon any Mortgaged Property are located in
an area determined by the Federal Emergency Management Agency to have special
flood hazards, evidence of such flood insurance as may be required under
applicable law, including Regulation H of the Board of Governors, and (iv) such
surveys, abstracts, appraisals, legal opinions and other documents as the
Administrative Agent may reasonably request with respect to any such Mortgage
or Mortgaged Property; provided, however, that the Administrative
Agent shall not require new surveys with respect to any Mortgaged Property if
the title insurance company issuing the Mortgage Policy in respect of such
Mortgaged Property will agree to a issue survey related endorsements thereto upon
receipt of a survey affidavit executed by the applicable record owner or
lessee;

 

(f)            with respect to the Deposit L/C
Escrow Account, each deposit account (other than (i) any deposit account
the funds in which are used, in the ordinary course of business, solely for 

 

8

 

the payment of salaries
and wages, workers’ compensation, payroll taxes, employee benefits and similar
expenses, (ii) any non-domestic deposit account the funds in which are
used, in the ordinary course of business, solely in the operation of Non-U.S.
Subsidiaries and (iii) deposit accounts the daily balance in which does
not at any time exceed $1,000,000 for any such account or $5,000,000 for all
such accounts) and each securities account maintained by any Loan Party with
any depositary bank or securities intermediary the Administrative Agent shall
have received a counterpart, duly executed and delivered by the applicable Loan
Party and such depositary bank or securities intermediary, as the case may be,
of a Control Agreement; and

 

(g)           each Loan Party shall have obtained
all landlord, warehouseman, agent, bailee and processor acknowledgments
required to be obtained by it pursuant to the Guarantee and Collateral
Agreement and all other consents and approvals required to be obtained by it in
connection with the execution and delivery of all Security Documents to which
it is a party, the performance of its obligations thereunder and the granting
by it of the Liens thereunder.

 

The
foregoing definition shall not require the creation or perfection of pledges of
or security interests in, or the obtaining of title insurance, legal opinions
or other deliverables with respect to, particular assets of the Loan Parties,
or the provision of Guarantees by any Subsidiary, if, and for so long as the
Administrative Agent, in consultation with Parent and EnergySolutions,
reasonably determines that the cost of creating or perfecting such pledges or
security interests in such assets, or obtaining such title insurance, legal
opinions or other deliverables in respect of such assets, or providing such
Guarantees (taking into account any adverse tax consequences to EnergySolutions
and its Affiliates (including the imposition of withholding or other material
taxes)), shall be excessive in view of the benefits to be obtained by the
Lenders therefrom. The Administrative Agent may grant extensions of time for
the creation and perfection of security interests in or the obtaining of title
insurance, legal opinions or other deliverables with respect to particular
assets or the provision of any Guarantee by any Subsidiary (including
extensions beyond the Closing Date or in connection with assets acquired, or
Subsidiaries formed or acquired, after the Closing Date) where it determines
that such action cannot be accomplished without undue effort or expense by the
time or times at which it would otherwise be required to be accomplished by
this Agreement or the Security Documents.

 

“Commitment”
shall mean a Term Commitment, a Revolving Commitment or any Incremental
Commitment, or any combination thereof (as the context requires).

 

“Consolidated
Adjusted EBITDA” shall mean, for any period, for Parent and its
Subsidiaries on a consolidated basis, Consolidated Net Income for such period, plus
(a) without duplication and to the extent deducted in determining such
Consolidated Net Income, the sum of (i) Cash Interest Expense for such
period, (ii) consolidated income tax expense for such period, (iii) all
amounts attributable to depreciation, amortization and accretion of asset
retirement obligations for such period (excluding amortization expense
attributable to a prepaid cash item that was paid in a prior period), (iv) any
extraordinary charges for such period, (v) any noncash charges for such
period (excluding any additions to bad debt reserves or bad debt expense and
any noncash charge to the extent it represents an accrual of or a reserve for
cash expenditures in any future period or amortization of a prepaid cash item
that was paid in a prior period), (vi) any losses attributable to early
extinguishment of Indebtedness or obligations under any Derivative Contract, (vii) any
noncash  expenses for such period
resulting from the grant of stock options or 

 

9

 

Equity
Interests in Parent to any director, officer or employee of Parent,
EnergySolutions or any of their respective Subsidiaries pursuant to a written
plan or agreement approved by the board of directors of Parent, (viii) the
cumulative effect of a change in accounting principles, (ix) any costs for
such period (if incurred prior to September 30, 2010) relating to the
Transactions, that are expensed rather than capitalized as debt issuance costs,
in an aggregate amount for all periods not to exceed $5,000,000, (x) pro
forma adjustments for cost savings and synergies (net of continuing associated
expenses) relating to any Permitted Acquisition during the 12-month period
commencing on the date of consummation of such Permitted Acquisition, to the
extent such cost savings and synergies could be reflected in pro forma
consolidated financial statements of Parent reflecting such Permitted
Acquisition that are prepared in accordance with Article 11 of Regulation
S-X promulgated under the Securities Act, as interpreted by the staff of the
SEC, (xi) amortization and write-offs of debt issuance costs, (xii) non-cash
impairment charges, write-offs or write-downs relating to goodwill or
intangible assets, (xiii) non-cash SFAS 133 income (or loss) relating to
hedging activities and (xiv) non-cash expenses or gains related to
recording of the fair market value of Derivative Contracts, and minus (b) without
duplication and to the extent included in determining such Consolidated Net
Income, (i) any extraordinary gains for such period, (ii) any noncash
items of income for such period (excluding any noncash items of income (A) in
respect of which cash was received in a prior period or will be received in a
future period or (B) that represents the reversal of any accrual for
anticipated cash charges in any prior period, but only to the extent such
accrual reduced Consolidated EBITDA for such prior period), (iii) any
gains attributable to the early extinguishment of Indebtedness or obligations
under any Derivative Contract and (iv) the cumulative effect of a change
in accounting principles; provided  further that Consolidated
Adjusted EBITDA shall be calculated so as to exclude the effect of any gain or
loss that represents after-tax gains or losses attributable to any sale,
transfer or other disposition, or any exclusive license, of assets by Parent or
any of its consolidated Subsidiaries, other than dispositions of inventory and
other dispositions and licenses in the ordinary course of business.

 

“Consolidated
Net Income” shall mean, for any period, the net income or loss of Parent
and its consolidated Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a) the
income of any Person (other than Parent ) that is not a consolidated Subsidiary
except to the extent of the amount of cash dividends or similar cash
distributions actually paid by such Person to Parent, EnergySolutions or,
subject to clauses (b) and (c) below, any other consolidated Subsidiary
during such period, (b) the income of, and any amounts referred to in
clause (a) above paid to, any consolidated Subsidiary (other than
EnergySolutions or any other Loan Party) to the extent that, on the date of
determination, the declaration or payment of cash dividends or similar cash
distributions by such Subsidiary is not permitted without any prior approval of
any Governmental Authority that has not been obtained or is not permitted by
the operation of the terms of the organizational documents of such Subsidiary,
any agreement or other instrument binding upon Parent or any Subsidiary or any
law applicable to Parent or any Subsidiary, unless such restrictions with
respect to the payment of cash dividends and other similar cash distributions
has been legally and effectively waived, and (c) the income or loss of,
and any amounts referred to in clause (a) above paid to, any consolidated
Subsidiary that is not wholly owned by Parent to the extent such income or loss
or such amounts are attributable to the noncontrolling interest in such
consolidated Subsidiary.

 

10

 

“Control”
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies, or the dismissal or
appointment of the management, of a Person, whether through the ability to
exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
shall have meanings correlative thereto.

 

“Control
Agreement” shall mean, with respect to any deposit account or securities
account maintained by any Loan Party, a control agreement in form and substance
reasonably satisfactory to the Administrative Agent, duly executed and
delivered by such Loan Party and the depositary bank or the securities
intermediary, as the case may be, with which such account is maintained.

 

“Covered
Taxes” shall have the meaning set forth in Section 2.17(a).

 

“CS”
shall mean Credit Suisse AG.

 

“Debt
Service” shall mean, for any period, for Parent and its consolidated
Subsidiaries, the amount of Cash Interest Expense during such period, together
with scheduled principal repayments made (excluding any repayments made or
required to be made in accordance with Section 2.11) in respect of
Indebtedness for Money Borrowed during such period.  For purposes of this definition, “principal”
shall include the principal component of payments for such period in respect of
Capitalized Lease Obligations.

 

“Default”
shall mean any event or condition that constitutes, or upon notice, lapse of
time or both would constitute, an Event of Default specified in Section 8.1.

 

“Defaulting
Lender” shall mean any Lender that (a) has failed, within two Business
Days of the date required to be funded or paid, to (i) fund any portion of
its Loans, (ii) fund any portion of its participations in Revolving
Letters of Credit or (iii) pay over to the Administrative Agent or any
Lender Party any other amount required to be paid by it hereunder, unless, in
the case of clause (i) above, such Lender notifies the Administrative
Agent in writing that such failure is the result of such Lender’s good-faith
determination that a condition precedent to funding (specifically identified
and including the particular default, if any) has not been satisfied, (b) has
notified EnergySolutions, the Administrative Agent or any Lender Party in
writing, or has made a public statement, to the effect that it does not intend
or expect to comply with any of its funding obligations under this Agreement
(unless such writing or public statement indicates that such position is based
on such Lender’s good-faith determination that a condition precedent
(specifically identified and including the particular default, if any) to
funding a loan under this Agreement cannot be satisfied) or generally under
other agreements in which it commits to extend credit, (c) has failed,
within three Business Days after request by the Administrative Agent or any
Lender Party, acting in good faith, to provide a certification in writing from
an authorized officer of such Lender that it will comply with its obligations
to fund prospective Loans and participations in then outstanding Revolving
Letters of Credit under this Agreement; provided that such Lender shall
cease to be a Defaulting Lender pursuant to this clause (c) upon the
Administrative Agent’s or such Lender Party’s receipt of such certification in
form and substance satisfactory to it and the Administrative Agent, or (d) has
become the subject of a Bankruptcy Event.

 

11

 

“Default
Rate” shall mean a rate per annum equal to (a) in the case of overdue
principal of any Loan, 2% per annum plus the rate otherwise applicable to such
Loan as provided in Section 2.7 or (b) in the case of any other
amount, 2% per annum plus the rate applicable to Base Rate Revolving Loans as
provided in Section 2.7.

 

“Deposit
Issuing Bank” shall mean (a) each of JPMCB and CS, (b) solely in
respect of any Existing Deposit Letter of Credit, the Revolving Lender that is
the issuer thereof, as set forth on Schedule 2.6, and (c) each Revolving
Lender that shall have become a Deposit Issuing Bank hereunder as provided in
Section 2.6(n) (other than any Person that shall have ceased to be a
Deposit Issuing Bank as provided in Section 2.6(o)), each in its capacity
as an issuer of Deposit Letters of Credit hereunder.  Each Deposit Issuing Bank may, in its
discretion, arrange for one or more Deposit Letters of Credit to be issued by
Affiliates of such Deposit Issuing Bank, in which case the term “Deposit
Issuing Bank” shall include any such Affiliate with respect to Deposit Letters
of Credit issued by such Affiliate (it being agreed that such Deposit Issuing
Bank shall, or shall cause such Affiliate to, comply with the requirements of
Section 2.6 with respect to such Deposit Letters of Credit).

 

“Deposit
L/C Depositary Bank” shall have the meaning set forth in
Section 2.6(m).

 

“Deposit
L/C Disbursement” shall mean a payment or disbursement made by a Deposit
Issuing Bank pursuant to a Deposit Letter of Credit.

 

“Deposit
L/C Escrow Account” shall have the meaning set forth in
Section 2.6(m).

 

“Deposit
L/C Escrow Account Balance” shall mean, at any time, the aggregate amount
of cash on deposit in the Deposit L/C Escrow Account.

 

“Deposit
L/C Exposure” shall mean, at any time, the sum of (a) the sum of the
Dollar Equivalents of the undrawn amounts of all outstanding Deposit Letters of
Credit at such time and (b) the sum of the Dollar Equivalents of all
Deposit L/C Disbursements that have not yet been reimbursed by or on behalf of
EnergySolutions at such time.

 

“Deposit
L/C Increase Election” shall have the meaning specified in Section 2.18(a).

 

“Deposit
L/C Secured Obligations” shall have the meaning specified in the Guarantee
and Collateral Agreement.

 

“Deposit
L/C Specified Amount” shall mean $310,000,000, representing the maximum
aggregate face amount of Deposit Letters of Credit permitted to be outstanding
under this Agreement, as such amount may be (a) decreased from time to
time pursuant to Section 2.19 and (b) increased from time to time
pursuant to Section 2.18.

 

“Deposit
Letter of Credit” shall mean any standby letter of credit issued pursuant
to Section 2.6(b) and any Existing Deposit Letter of Credit.

 

“Derivative
Contract” shall mean any forward contract (other than a forward contract to
purchase inputs or provide services entered into in the ordinary course of the
Permitted Business), futures contract, option (other than an option to purchase
inputs or provide services 

 

12

 

entered
into in the ordinary course of the Permitted Business), swap, notional principal
contract, synthetic position or other financial contract similar to any of the
foregoing and, for the avoidance of doubt, shall include any Hedge Agreement.

 

“Disqualified
Equity Interest” means, with respect to any Person, any Equity Interest in such
Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable, either mandatorily or at the
option of the holder thereof), or upon the happening of any event or condition:

 

(a) 
matures or is mandatorily redeemable (other than solely for Equity Interests in
such Person that do not constitute Disqualified Equity Interests and cash in
lieu of fractional shares of such Equity Interests), whether pursuant to a
sinking fund obligation or otherwise;

 

(b) 
is convertible or exchangeable, either mandatorily or at the option of the
holder thereof, for Indebtedness or Equity Interests (other than solely for
Equity Interests in such Person that do not constitute Disqualified Equity
Interests and cash in lieu of fractional shares of such Equity Interests); or

 

(c) 
is redeemable (other than solely for Equity Interests in such Person that do
not constitute Disqualified Equity Interests and cash in lieu of fractional
shares of such Equity Interests) or is required to be repurchased by Parent,
EnergySolutions or any of their respective Subsidiaries, in whole or in part,
at the option of the holder thereof;

 

in
each case, on or prior to the date 180 days 
after the Term Maturity Date; provided, however, that an Equity
Interest in any Person that would not constitute a Disqualified Equity Interest
but for terms thereof giving holders thereof the right to require such Person
to redeem or purchase such Equity Interest upon the occurrence of an “asset
sale” or a “change of control” (or similar event, however denominated) shall
not constitute a Disqualified Equity Interest if any such requirement becomes
operative only after repayment in full of all the Loans and all other
Obligations that are accrued and payable, the cancellation or expiration of all
Letters of Credit and the termination or expiration of the Commitments.

 

“Dollar
Equivalent” shall mean, on any date of determination, (a) with respect
to any amount denominated in U.S. Dollars, such amount and (b) with respect
to any amount denominated in any Available Foreign Currency, the equivalent in
U.S. Dollars of such amount, determined by the Administrative Agent using the
applicable Exchange Rate.

 

“Domestic
DRE” shall mean any Subsidiary that (a) is incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia, (b) is a disregarded entity for Federal Income tax
purposes, (c) does not hold any assets other than Equity Interests in
Non-U.S. Subsidiaries, (d) does not engage in any business or activity
other than ownership of such Equity Interests and (e) does not have any
liabilities or other obligations.

 

“Domestic
Subsidiary” shall mean any Subsidiary, except any Domestic DRE,
incorporated or organized under the laws of the United States of America, any
State thereof or the District of Columbia.

 

“Duratek”
shall have the meaning set forth in the recitals hereto.

 

13

 

“Eligible
Assignee” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund and (d) any other Person, other than, in each case, a
natural person or Parent, EnergySolutions, any of their respective Subsidiaries
or other Affiliates.

 

“Eligible
Deposit Account Investments” shall mean (a) to the extent available
with the applicable Deposit L/C Depositary Bank, money market funds that (i) comply
with the criteria set forth in Rule 2a-7 under the Investment Company Act
of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have
portfolio assets of at least $5,000,000,000 and (b) investments in money
market deposit accounts issued or offered by JPMCB or its Affiliates.

 

“Engagement
Letter” shall mean the Engagement Letter dated July 21, 2010, among
EnergySolutions, the Administrative Agent and the Arrangers.

 

“Environmental
Cleanup Activities” shall have the meaning set forth in
Section 5.16(c).

 

“Environmental
Law” shall mean any applicable Federal, state or local law, statute,
treaty, convention, rule, regulation, ordinance, code, decree, injunction,
criterion, guideline, directive, Environmental Permit, writ, order or judgment
(including common law), and any applicable requirement thereunder, relating to
human health or safety as it relates to environmental protection or Hazardous Materials,
Hazardous Materials, pollution, noise, the environment or natural resources.

 

“Environmental
Liability” shall mean all liabilities, obligations, damages, losses,
claims, actions, suits, proceedings, demands, judgments, orders, decrees,
directives, fines, penalties, fees, expenses and costs (including liability or
responsibility for the costs of enforcement proceedings, investigations,
cleanup, governmental response, administrative oversight, removal or
remediation, natural resources damages, property damages, personal injuries,
medical monitoring, penalties, contribution, indemnification and injunctive
relief), whether contingent or otherwise, arising out of or relating to: (a) non-compliance
with any Environmental Law (including any permitting, licensing or financial
assurance requirements thereunder), (b) the generation, use, handling,
transportation, storage, treatment, processing, enrichment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
Release of any Hazardous Materials or (e) any contract or agreement
enforceable under Applicable Law pursuant to which liability is assumed or
imposed with respect to any of the foregoing.

 

“Environmental
Permit” shall mean any permit, authorization, approval, license, registration,
consent, order, certificate, waiver, exception, variance, exemption or filing
with or issued by any Governmental Authority relating to or required by any
Environmental Law.

 

“Environmental
Testing” shall have the meaning set forth in Section 5.16(c).

 

“Equity
Interests” shall mean shares of capital stock, partnership interests,
membership interests, beneficial interests or other ownership interests,
whether voting or nonvoting, in, or interests in the income or profits of, a
Person, and any warrants, options or other rights entitling the holder thereof
to purchase or acquire any of the foregoing.

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974 and the
regulations promulgated and rulings thereunder.

 

14

 

“ERISA
Affiliate” shall mean any trade or business (whether or not incorporated),
including a Subsidiary or an Affiliate of EnergySolutions, that together with
EnergySolutions is treated as a single employer (within the meaning of Section 414(b) or
414(c) of the Code) or, solely for the purpose of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under
Section 414(m) or 414(o) of the Code.

 

“ERISA
Affiliate Plan” shall mean any employee pension benefit plan (other than a
Multiemployer Plan) as defined in Section 3(2) of ERISA, subject to
Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code
maintained by an ERISA Affiliate or to which an ERISA Affiliate contributed,
contributes or is obligated to contribute.

 

“Euro”
or “€” shall mean the single currency of the Participating Member States.

 

“Eurocurrency
Liabilities” shall have the meaning set forth in Regulation D of the Board
of Governors of the Federal Reserve System, as in effect from time to time.

 

“Eurodollar”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Adjusted Eurodollar Rate.

 

“Eurodollar
Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on the Reuters “LIBOR01” screen displaying British
Bankers’ Association Interest Settlement Rates (or on any successor or
substitute screen provided by Reuters, or any successor to or substitute for
such service, providing rate quotations comparable to those currently provided
on such screen, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to U.S. Dollar
deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for U.S. Dollar deposits with a maturity comparable to such
Interest Period.  In the event that such
rate is not available at such time for any reason, then the “Eurodollar Rate”
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which U.S. Dollar deposits of $5,000,000 and for a maturity comparable
to such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period.

 

“Eurodollar
Reserve Percentage”, for any Interest Period, shall mean the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including any emergency, supplemental or other marginal
reserve requirement) for a member bank of the Federal Reserve System in New
York City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the interest rate on Eurodollar
Loans is determined) having a term equal to such Interest Period.

 

“Event
of Default” shall mean each of the events specified in Section 8.1.

 

15

 

“Excess
Cash Flow” shall mean, for each fiscal year, based on the audited financial
statements for such fiscal year required to be provided under Section 6.2,
without duplication, (a) Consolidated Adjusted EBITDA for such fiscal year
minus (b) the sum of (i) Capital Expenditures by Parent and
its consolidated Subsidiaries during such fiscal year (other than Capital
Expenditures that are financed with Excluded Sources), (ii) cash Taxes
accrued or paid (unless previously accrued) by Parent and its consolidated
Subsidiaries during such fiscal year, (iii) Debt Service paid by Parent
and its consolidated Subsidiaries during such fiscal year, (iv) the amount,
if any, by which Net Working Capital increased during such fiscal year, (v) to
the extent included in the calculation of Consolidated Adjusted EBITDA, legal
fees and expenses of, or the payment of any judgment against, any Loan Party
paid by Parent during such fiscal year, (vi) up to $10,000,000 of
Restricted Payments actually made to holders of Equity Interests of Parent
during such fiscal year in accordance with Section 7.7(b)(i) and (vii) cash
paid by Parent and its consolidated Subsidiaries in respect of Permitted
Acquisitions during such fiscal year, other than to the extent financed with
Excluded Sources and plus (c) the amount, if any, by which Net
Working Capital decreased during such fiscal year.

 

“Exchange
Act” shall mean the United States Securities Exchange Act of 1934.

 

“Exchange
Rate” shall mean, on any day with respect to any Available Foreign
Currency, the rate at which such Available Foreign Currency may be exchanged
into U.S. Dollars, as set forth at approximately 11:00 a.m. (London time)
on such day on the Reuters WRLD Page for such Available Foreign Currency;
in the event that such rate does not appear on any Reuters WRLD Page, the
Exchange Rate shall be determined by reference to such other publicly available
service for displaying exchange rates as determined by the Administrative
Agent, or, in the absence of any such publicly available service, such Exchange
Rate shall instead be the arithmetic average of the spot rates of exchange of
the Administrative Agent in the market where its foreign currency exchange
operations in respect of such Available Foreign Currency are then being
conducted, at or about 10:00 a.m., New York City time, on such date for
the purchase of U.S. Dollars for delivery two Business Days later; provided
that if at the time of any such determination, for any reason, no such spot
rate is being quoted, the Administrative Agent may use any reasonable method it
deems appropriate to determine such rate, and such determination shall be
conclusive absent demonstrable error.

 

“Excluded
Asset Sales” shall mean (a) sales, leases or other dispositions of
inventory in the ordinary course of business and obsolete or worn-out assets, (b) any
sale or discount, in each case without recourse and in the ordinary course of
business, of accounts receivable arising in the ordinary course of business,
but only in connection with the compromise or collection thereof and not as
part of any financing or securitization transaction, (c) any transfer of
assets by any consolidated Subsidiary of EnergySolutions to EnergySolutions and
any transfer of assets by EnergySolutions or Parent to any of their respective
consolidated Subsidiaries, or between any of such Consolidated Subsidiaries, so
long as the security interests granted to the Administrative Agent for the
benefit of the Secured Parties pursuant to the Security Documents in the assets
so transferred shall remain in full force and effect and remain perfected and
of the same priority (to at least the same extent as in effect immediately
prior to such transfer), (d) any sale or disposition of personal property
with a fair market value in the aggregate of less than $2,500,000 per year, (e) dispositions
of personal property to the extent that (i) such personal property is
exchanged for credit against the purchase price of replacement personal
property performing the same function 

 

16

 

or
(ii) the proceeds of any such disposition are promptly applied to the
purchase price of similar replacement personal property, (f) sales,
transfers, contributions or dispositions of assets contributed for the purpose
of creating a Special Purpose Subsidiary other than ZionSolutions otherwise
permitted herein not to exceed $10,000,000 per such Special Purpose Subsidiary,
(g) sales, transfers, contributions or dispositions of assets (i) of
a Special Purpose Subsidiary for the purpose of terminating, liquidating or
winding down such Special Purpose Subsidiary or (ii) pursuant to the Zion
Agreements with a fair market value not exceeding the fair market value of any
assets to be disposed of or transferred pursuant to the Zion Agreements in the
forms delivered to the Administrative Agent prior to the Closing Date (without,
for the avoidance of doubt, giving effect to any amendments or modifications
thereof pursuant to clause (o) of the definition of the term “Zion
Agreements”) or (h) additional dispositions or transfers of assets in
connection with the Zion Acquisition pursuant to the Zion Agreements with an
aggregate fair market value not exceeding $5,000,000.

 

“Excluded
Sources” shall mean (a) proceeds of any incurrence or issuance of
Long-Term Indebtedness and Capitalized Lease Obligations and (b) Net
Proceeds of any sale, transfer, lease or other disposition, or any exclusive
license, of assets made in reliance on Section 7.4 or of any casualty or
condemnation event.

 

“Exelon”
shall have the meaning set forth in the recitals hereto.

 

“Existing
Credit Agreements” shall mean (a) the Third Amended and Restated
Credit Agreement dated as of September 23, 2009, as amended as of January 14,
2010 and as further amended as of July 12, 2010, among Parent,
EnergySolutions, the lenders party thereto and Citicorp North America, Inc.
(“CNAI”), as administrative agent, and (b) the Amended and Restated
Credit Agreement, dated as of September 23, 2009, as amended as of January 14,
2010 and as further amended as of July 12, 2010, among Duratek, the
lenders party thereto and CNAI, as administrative agent.

 

“Existing
Deposit Letter of Credit” shall mean each Existing Letter of Credit
designated as a “Deposit Letter of Credit” on Schedule 2.6.

 

“Existing
Letter of Credit” shall mean each letter of credit previously issued for
the account of EnergySolutions or any of its Subsidiaries pursuant to any of
the Existing Credit Agreements that is outstanding on the Closing Date and
listed on Schedule 2.6, but shall not include any renewal or extension of
any such letter of credit other than an Existing Letter of Credit issued by a
Revolving Issuing Bank.

 

“Existing
Revolving Letter of Credit” shall mean each Existing Letter of Credit
designated as a “Revolving Letter of Credit” on Schedule 2.6.

 

“FATCA”
shall mean Sections 1471 through 1474 of the Code, as in effect on the Closing
Date.

 

“Federal
Funds Rate” shall mean, as of any date, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with the members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is 

 

17

 

not
so published for any day which is a Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for such day on such
transactions received by the Administrative Agent or its Affiliates from three
Federal funds brokers of recognized standing selected by the Administrative
Agent or its Affiliates.

 

“Fee
Letter” shall mean the Fee Letter dated July 21, 2010, among
EnergySolutions, the Administrative Agent and the Arrangers.

 

“Financial
Officer” shall mean, with respect to any Person, the chief financial
officer, chief accounting officer, treasurer or controller of such Person.

 

“Foreign
Pledge Agreement” shall mean a pledge or charge agreement granting a Lien
on Equity Interests in a Non-U.S. Subsidiary to secure the Secured Obligations,
governed by the law of the jurisdiction of organization of such Non-U.S.
Subsidiary and in form and substance reasonably satisfactory to the
Administrative Agent.

 

“GAAP”
shall mean generally accepted accounting principles in the United States of
America, applied in accordance with the consistency requirements thereof.

 

“Governmental
Authority” shall mean the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supranational body exercising such powers or functions, such as the
European Union or the European Central Bank).

 

“Guarantee”
of or by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness
or other obligation or to purchase (or to advance or supply funds for the
purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to
maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account
party in respect of any letter of credit or letter of guaranty issued to
support such Indebtedness or other obligation; provided that the term “Guarantee”
shall not include endorsements for collection or deposit in the ordinary course
of business.  The amount, as of any date
of determination, of any Guarantee shall be the principal amount outstanding on
such date of Indebtedness or other obligation guaranteed thereby (or, in the
case of (i) any Guarantee the terms of which limit the monetary exposure
of the guarantor or (ii) any Guarantee of an obligation that does not have
a principal amount, the maximum monetary exposure as of such date of the
guarantor under such Guarantee (as determined, in the case of clause (i),
pursuant to such terms or, in the case of clause (ii), reasonably and in good
faith by a Financial Officer of Parent)).

 

18

 

“Guarantee
and Collateral Agreement” shall mean the Guarantee and Collateral Agreement
among Parent, EnergySolutions, the other Loan Parties and the Administrative
Agent, substantially in the form of Exhibit C, together with all
supplements thereto.

 

“Hazardous
Material” shall mean (a) any petroleum or petroleum product,
explosive, radioactive material (including any natural or artificial
radioactive byproduct, daughter product, isotope or waste), asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, dioxins, furans or
lead and (b) any substance, material, product, derivative, compound,
mixture, mineral, chemical, waste, solid, liquid or gas, in each case whether
naturally occurring, human made or the by-product of any process, (i) that
is now or hereafter becomes defined as or included within the definition of a “hazardous
substance”, “hazardous waste”, “hazardous material”, “radioactive waste”, “mixed
waste”, “toxic chemical”, “toxic substance”, “toxic waste”, “hazardous chemical”,
“extremely hazardous substance”, “extremely hazardous waste”, “restricted
hazardous waste”, “pollutant”, “contaminant”, or any other words of similar
meaning under any Environmental Law or (ii) exposure to which or the
presence, use, generation, treatment, Release, transport, enrichment,
refinement or storage of which is now or hereafter prohibited, limited,
restricted or regulated under any Environmental Law or by any Governmental
Authority.

 

“Hedge
Agreements” shall mean (a) Derivative Contracts entered into to hedge
or mitigate risks to which Parent, EnergySolutions or any of their respective
Subsidiaries has actual exposure (other than in respect of Equity Interests or
Indebtedness of Parent, EnergySolutions or any of their respective
Subsidiaries) and (b) Derivative Contracts entered into in order to
effectively cap, collar or exchange interest rates (from fixed to floating
rates, from one floating rate to another floating rate or otherwise) with
respect to any interest-bearing liability or investment of Parent,
EnergySolutions or any of their respective Subsidiaries.

 

“Historical
Financial Statements” shall have the meaning set forth in
Section 4.11.

 

“Increase
Effective Date” shall have the meaning set forth in Section 2.18(a).

 

“Incremental
Commitment Cap” shall mean, at any time, the excess, if any, of
(a) $150,000,000 over (b) the sum of the aggregate amount of all
Incremental Term Commitments and Incremental Revolving Commitments established
prior to such time in accordance with Section 2.18.

 

“Incremental
Commitments” shall mean, collectively, the Incremental Term Commitments and
the Incremental Revolving Commitments.

 

“Incremental
Facility Amendment” shall have the meaning set forth in Section 2.18(g).

 

“Incremental
Lender” shall mean any Lender that shall have become a Lender hereunder
pursuant to Section 2.18.

 

“Incremental
Loan” shall mean any Loan made pursuant to an Incremental Commitment.

 

“Incremental
Revolving Commitment” shall have the meaning set forth in
Section 2.18(a).

 

19

 

“Incremental
Term Commitment” shall have the meaning set forth in Section 2.18(a).

 

“Incremental
Term Loan” shall have the meaning set forth in Section 2.18(a).

 

“Indebtedness”
of any Person shall mean, without duplication, (a) all obligations of such
Person for borrowed money or represented by notes payable and drafts accepted
representing extensions of credit, (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (d) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (e) all Indebtedness (excluding prepaid
interest thereon) of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed; provided that, if
recourse for the payment of such Indebtedness is limited exclusively to such
property and such Person has no personal liability with respect thereto, the
amount of Indebtedness under this clause (e) shall be deemed to be equal
to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the
fair market value of the property encumbered thereby, (f) all Guarantees
by such Person of Indebtedness of others, (g) all Capitalized Lease
Obligations of such Person, (h) the maximum aggregate amount of all
letters of credit and letters of guaranty in respect of which such Person is an
account party, (i) all obligations, contingent or otherwise, of such
Person in respect of bankers’ acceptances and (j) all Disqualified Equity
Interests in such Person, valued, as of the date of determination, at the greater
of (i) the maximum aggregate amount that would be payable upon maturity,
redemption, repayment or repurchase thereof (or of Disqualified Equity
Interests or Indebtedness into which such Disqualified Equity Interests are
convertible or exchangeable) and (ii) the maximum liquidation preference
of such Disqualified Equity Interests. 
The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is directly liable therefor as a result of
such Person’s ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.

 

“Indebtedness
for Money Borrowed” shall mean, as of any date with respect to any Person,
without duplication, (a) all Indebtedness of such Person for borrowed
money or represented by notes payable and drafts accepted representing
extensions of credit, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) all obligations
of such Person owing under Derivative Contracts (after giving effect to
applicable netting agreements with the counterparty), (d) all Indebtedness
of such Person upon which interest charges are customarily paid, (e) all
Capitalized Lease Obligations of such Person, (f) all unsatisfied
reimbursement obligations of such Person in respect of draws under any letter
of credit or letter of guaranty (it being understood that no undrawn letters of
credit shall constitute Indebtedness for Money Borrowed), (g) all
Indebtedness of such Person issued or assumed as full or partial payment for
property or services (other than trade accounts payable arising in the ordinary
course of business, but only if and for so long as such accounts are payable on
customary trade terms) and (h) Guarantees of any of the foregoing; provided
that solely for the purposes of determining compliance with
Sections 2.18(b)(iii) and 7.6(a), the Term Loans shall be deemed to
constitute Indebtedness for Money Borrowed only to the extent the

 

20

 

outstanding
principal amount thereof exceeds the Deposit L/C Escrow Account Balance.  For purposes of this definition, interest
which is accrued but not paid on the scheduled due date for such interest shall
be deemed to constitute Indebtedness for Money Borrowed.

 

“Indemnitee”
shall have the meaning set forth in Section 10.2(b).

 

“Interest
Coverage Ratio” shall mean, as of any calculation date and for the four
consecutive fiscal quarter period most recently ended on or prior to such date,
on a consolidated basis for Parent and its Subsidiaries, the ratio of
Consolidated Adjusted EBITDA to Cash Interest Expense for such period.

 

“Interest
Election Request” shall mean a request by EnergySolutions to convert or
continue a Borrowing in accordance with Section 2.5, which shall be, in
the case of any such written request, in the form of Exhibit D or any
other form approved by the Administrative Agent.

 

“Interest
Payment Date” shall mean (a) with respect to any Base Rate Loan, the
last day of each March, June, September and December and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months’ duration, such day
or days prior to the last day of such Interest Period as shall occur at
intervals of three months’ duration after the first day of such Interest
Period.

 

“Interest
Period” shall mean, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or
six months thereafter (or, if agreed to by each Lender participating
therein, nine or 12 months thereafter), as EnergySolutions may elect; provided
that (a) if any Interest Period would end on a day which is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding Business Day,
and (b) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter
shall be the effective date of the most recent conversion or continuation of
such Borrowing.

 

“Investment”
means, with respect to a specified Person, any Equity Interests, evidences of
Indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, or any capital contribution or loans or
advances (other than advances made in the ordinary course of business that
would be recorded as accounts receivable on the balance sheet of the specified
Person prepared in accordance with GAAP) to, Guarantees of any Indebtedness or
other obligations of, or any other investment in, any other Person that are
held or made by the specified Person. 
The amount, as of any date of determination, of (a) any Investment
in the form of a loan or an advance shall be the principal amount thereof
outstanding on such date, without any adjustment for write-downs or write-offs
(including as a result of forgiveness of any portion thereof) with respect to
such loan or advance after the date thereof, (b) 

 

21

 

any
Investment in the form of a Guarantee shall be determined in accordance with
the definition of the term “Guarantee”, (c) any Investment in the form of
a transfer of Equity Interests or other property by the investor to the
investee, including any such transfer in the form of a capital contribution,
shall be the fair value (as determined reasonably and in good faith by the
chief financial officer of Parent) of such Equity Interests or other property
as of the time of the transfer, without any adjustment for increases or
decreases in value of, or write-ups, write-downs or write-offs with respect to,
such Investment after the date of such transfer, (d) any Investment (other
than any Investment referred to in clause (a), (b) or (c) above) by
the specified Person in the form of a purchase or other acquisition for value
of any Equity Interests, evidences of Indebtedness or other securities of any
other Person shall be the original cost of such Investment (including any
Indebtedness assumed in connection therewith), plus the cost of all additions,
as of such date, thereto, and minus the amount, as of such date, of any portion
of such Investment repaid to the investor in cash as a repayment of principal
or a return of capital, as the case may be, but without any other adjustment
for increases or decreases in value of, or write-ups, write-downs or write-offs
with respect to, such Investment after the date of such Investment, and (e) any
Investment (other than any Investment referred to in clause (a), (b), (c) or
(d) above) by the specified Person in any other Person resulting from the
issuance by such other Person of its Equity Interests to the specified Person
shall be the fair value (as determined reasonably and in good faith by the
chief financial officer of Parent) of such Equity Interests at the time of the
issuance thereof.

 

“IP
Security Agreements” shall have the meaning assigned to such term in the
Guarantee and Collateral Agreement.

 

“Issuing
Bank” shall mean any Deposit Issuing Bank or Revolving Issuing Bank.

 

“JPMCB”
shall mean JPMorgan Chase Bank, N.A.

 

“Judgment
Currency” shall have the meaning set forth in Section 10.19(b).

 

“Latest
Financial Reporting Date” shall have the meaning set forth in Section 7.1(u).

 

“L/C
Calculation Date” means, with respect to any L/C Disbursement made in an
Available Foreign Currency, (a) the date on which the applicable Issuing
Bank shall advise the Administrative Agent that it purchased with U.S. Dollars
the currency used to make such L/C Disbursement or (b) if such Issuing
Bank shall not advise the Administrative Agent that it made such purchase, the
date on which such L/C Disbursement is made.

 

“L/C
Disbursement” shall mean a payment or disbursement made by an Issuing Bank
pursuant to a Letter of Credit.

 

“L/C
Exchange Rate” means, on any day, with respect to U.S. Dollars in relation
to any Available Foreign Currency, the rate at which U.S. Dollars may be
exchanged into such Available Foreign Currency, as set forth at approximately
12:00 noon, New York City time, on such day on the applicable Reuters World
Currency Page.  In the event that such
rate does not appear on the applicable Reuters World Currency Page, the L/C
Exchange Rate shall be determined by reference to such other publicly available
service for displaying exchange rates as may be agreed upon by the
Administrative Agent and EnergySolutions or, in the absence of such 

 

22

 

agreement,
such L/C Exchange Rate shall instead be the arithmetic average of the spot
rates of exchange of the Administrative Agent in the market where its foreign
currency exchange operations in respect of such currency are then being
conducted, at or about 11:00 a.m., London time, on such date for the
purchase of such Available Foreign Currency with U.S. Dollars for delivery two
Business Days later; provided that if at the time of any such
determination, for any reason, no such spot rate is being quoted, the
Administrative Agent, after consultation with EnergySolutions, may use any
reasonable method it deems appropriate to determine such rate, and such
determination shall be conclusive absent manifest error.

 

“L/C
Exposure” shall mean, at any time, the sum of the Deposit L/C Exposure and
the Revolving L/C Exposure at such time.

 

“Lender”
shall mean each Person listed on the signature pages hereto as a Lender
and any other Person that becomes a Lender hereunder pursuant to
Section 2.18 or 10.4, for so long as such Person shall be a party to this
Agreement.

 

“Lender
Party” shall mean any Lender or any Issuing Bank.

 

“Letter
of Credit” shall mean, as the context may require, a Revolving Letter of
Credit or a Deposit Letter of Credit.

 

“Leverage
Ratio” shall mean, as of any calculation date, on a consolidated basis for
Parent and its Subsidiaries, the ratio of Indebtedness for Money Borrowed as of
such calculation date to Consolidated Adjusted EBITDA for the period of four
consecutive fiscal quarters most recently ended on or prior to such calculation
date.

 

“Licenses”
shall mean any permits or licenses held by Parent, EnergySolutions or any of
their respective Subsidiaries, all of which are listed as of the Closing Date
on Schedule 4.6.

 

“Lien”
shall mean, with respect to any property, any mortgage, lien, pledge,
assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind in
respect of such property, whether created by statute, contract, the common law
or otherwise, and whether or not choate, vested or perfected; provided, however,
that the term “Lien” shall not include any license, sublicense, lease or
sublease (other than any capital or synthetic lease) of or with respect to any
personal property.

 

“Loan
Certificate” shall mean a certificate in the form of Exhibit E.

 

“Loan
Documents” shall mean this Agreement, the Guarantee and Collateral
Agreement, the other Security Documents and, except for purposes of
Section 10.10, the Notes.

 

“Loan
Parties” shall mean, collectively, Parent, EnergySolutions and each
Subsidiary Guarantor.

 

“Loans”
shall mean, collectively, the Term Loans and the Revolving Loans and shall
include, unless the context otherwise requires, the Incremental Loans of either
Class.

 

23

 

“Long-Term
Indebtedness” shall mean any Indebtedness that, in accordance with GAAP,
constitutes (or, when incurred, constituted) a long-term liability.

 

“Long-Term
Funded Indebtedness” shall mean, as of any date, the sum of all Long-Term
Indebtedness of EnergySolutions and its Subsidiaries of the types referred to
in clauses (a) and (b) of the definition of the term “Indebtedness”.  As used in Section 5.11, “Long-Term
Funded Indebtedness” shall include (i) the Term Loans only to the extent
such Loans constitute “Indebtedness for Money Borrowed” for purposes of Section 7.6(a) and
(ii) the Senior Notes.

 

“Majority
in Interest”, when used in reference to the Lenders of any Class, shall
mean, at any time, (a) in the case of the Revolving Lenders, Lenders
having Revolving Exposures and unused Revolving Commitments representing more
than 50% of the sum of the Aggregate Revolving Exposure and the unused
Aggregate Revolving Commitment at such time and (b) in the case of the
Term Lenders, Lenders holding outstanding Term Loans representing more than 50%
of all Term Loans outstanding at such time.

 

“Majority
Lenders” shall mean, at any time, Lenders having Revolving Exposures, Term
Loans and unused Revolving Commitments representing more than 50% of the sum of
the Aggregate Revolving Exposure, outstanding Term Loans and unused Revolving
Commitments at such time.

 

“Material
Adverse Change” shall mean any act, omission, event, development or
circumstance that has had or could reasonably be expected to have a material
adverse effect on or affecting (a) the Transactions, (b) the
business, assets, properties, liabilities (fixed or contingent), condition
(financial or otherwise), operations, business or prospects of Parent,
EnergySolutions and their respective Subsidiaries, taken as a whole, or (c) the
validity, enforceability or priority of any of the Loan Documents or the Liens
thereunder or the rights and remedies of the Administrative Agent and the
Lender Parties thereunder.

 

“Material
Indebtedness” shall mean Indebtedness (other than the Loans, Letters of
Credit and Guarantees under the Loan Documents), or obligations in respect of
one or more Derivative Contracts, of any one or more of Parent, EnergySolutions
and their respective Subsidiaries in an aggregate principal amount of
$5,000,000 or more.  For purposes of
determining Material Indebtedness, the “principal amount” of the obligations of
Parent, EnergySolutions or any of their respective Subsidiaries in respect of
any Derivative Contract at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that Parent, EnergySolutions or any
such Subsidiary would be required to pay if such Derivative Contract were
terminated at such time.

 

“MNPI”
shall mean material information concerning Parent, EnergySolutions and each of
their respective Subsidiaries and their respective securities that has not been
disseminated in a manner making it available to investors generally, within the
meaning of Regulation FD under the Securities Act and the Exchange Act.

 

“Moody’s”
shall mean Moody’s Investors Service, a subsidiary of Moody’s Corporation, and
any successor to its rating agency business.

 

24

 

“Mortgage”
shall mean a mortgage, deed of trust, assignment of leases and rents, leasehold
mortgage or other security document granting a Lien on any Mortgaged Property
to secure the Secured Obligations.  Each
Mortgage shall be in form and substance reasonably satisfactory to the
Administrative Agent.

 

“Mortgage
Policy” shall mean each mortgage title insurance policy issued, or to be
issued, in favor of the Administrative Agent in connection with any Mortgage
and each endorsement issued, or to be issued, to any mortgage title insurance
policy in connection with any amendment thereof, as provided for herein.

 

“Mortgaged
Property” shall mean (a) as of the Closing Date, the real property
designated as “Mortgaged Property” on Schedule 4.22 and (b) thereafter,
all of the real property referred to in clause (a) together with any and
all real property which is encumbered by a Mortgage pursuant to
Sections 5.10 and 5.12.

 

“Multiemployer
Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of
ERISA that has been maintained, sponsored or contributed to by Parent,
EnergySolutions, any of their respective Subsidiaries or any of their
respective ERISA Affiliates.

 

“Necessary
Authorizations” shall mean all approvals and licenses from, and all filings
and registrations with, any Governmental Authority, including the Licenses and
all grants, approvals, licenses, filings and registrations necessary in order
to enable Parent or any of its Subsidiaries to own, construct, maintain and
operate its Permitted Business and to make and hold Investments in other
Persons who own, construct, maintain and operate their respective Permitted
Businesses.

 

“Net
Proceeds” shall mean, with respect to any event, (a) the cash (which
term, for purposes of this definition, shall include Cash Equivalents) proceeds
(including, in the case of any casualty, condemnation or similar proceeding,
insurance, condemnation or similar proceeds) received in respect of such event,
including any cash received in respect of any noncash proceeds, but only as and
when received, net of (b) the sum, without duplication, of (i) all
reasonable fees and out-of-pocket expenses paid in connection with such event
by Parent, EnergySolutions and their respective Subsidiaries to Persons that
are not Affiliates of Parent, EnergySolutions or any of their respective
Subsidiaries, (ii) in the case of a sale, transfer, lease or other
disposition (including pursuant to a sale/leaseback transaction or a casualty
or a condemnation or similar proceeding), or an exclusive license, of an asset,
the amount of all payments required to be made by Parent, EnergySolutions and
their respective Subsidiaries as a result of such event to repay Indebtedness
(other than Loans) secured by such asset and (iii) the amount of all taxes
paid (or reasonably estimated to be payable) by Parent, EnergySolutions and
their respective Subsidiaries, and the amount of any reserves established by
Parent, EnergySolutions and their respective Subsidiaries in accordance with
GAAP to fund purchase price adjustment, indemnification and similar contingent
liabilities (other than any earnout obligations) reasonably estimated to be
payable, in each case during the year that such event occurred (or the year any
payment is received in respect of such event) or the next succeeding year and
that are directly attributable to the occurrence of such event (as determined
reasonably and in good faith by the chief financial officer of Parent).  For purposes of this definition, in the event
any contingent liability reserve established with respect to any event as
described in clause 

 

25

 

(b)(iii) above
shall be reduced, the amount of such reduction shall, except to the extent such
reduction is made as a result of a payment having been made in respect of the
contingent liabilities with respect to which such reserve has been established,
be deemed to be receipt, on the date of such reduction, of cash proceeds in
respect of such event.

 

“Net
Working Capital” shall mean, at any date, (a) the consolidated current
assets of Parent and its consolidated Subsidiaries as of such date (excluding
cash and Cash Equivalents) minus (b) the consolidated current
liabilities of Parent and its consolidated Subsidiaries as of such date
(excluding current liabilities in respect of Indebtedness).  Net Working Capital at any date may be a
positive or negative number.  Net Working
Capital increases when it becomes more positive or less negative and decreases
when it becomes less positive or more negative.

 

“Non-Defaulting
Lender” shall mean a Revolving Lender that is not a Defaulting Lender.

 

“Non-U.S. Lender”
shall mean a Lender that is not a U.S. Person.

 

“Non-U.S.
Subsidiary” shall mean any Subsidiary that is not a Domestic Subsidiary or
a Domestic DRE.

 

“Note”
shall mean any promissory note in the form of Exhibit F executed and
delivered to any Lender pursuant to Section 2.12

 

“Obligations”
shall have the meaning set forth in the Guarantee and Collateral Agreement.

 

“Other
Taxes” shall have the meaning set forth in Section 2.17(b)

 

“Parent”
shall have the meaning set forth in the preamble hereto.

 

“Participant”
shall have the meaning set forth in Section 10.4(c).

 

“Participant
Register” shall have the meaning set forth in Section 10.4(c).

 

“Participating
Member State” shall mean any member state of the European Community that
adopts or has adopted the Euro as its lawful currency in accordance with
legislation of the European Community relating to the Economic and Monetary
Union.

 

“Patriot
Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Pub. L. 107-56, signed into law on October 26, 2001.

 

“PBGC”
shall mean the Pension Benefit Guaranty Corporation or any successor thereto.

 

“Perfection
Certificate” shall mean a certificate signed by an Authorized Signatory of
each Loan Party in substantially the form of Exhibit G, together with all
attachments contemplated thereby.

 

26

 

“Performance
Certificate” shall mean a certificate of a Financial Officer of Parent and
EnergySolutions as to its financial performance and compliance with, among
other things, the covenants set forth in Sections 7.6 and 7.15, in
substantially the form of Exhibit H.

 

“Permitted Acquisition” shall mean (a) an Acquisition by
EnergySolutions or any of its Subsidiaries of any Person (i) which, along
with its subsidiaries acquired in the same Acquisition, is primarily engaged in
a Permitted Business, (ii) not less than 90% of the consolidated assets,
revenues and net income of which, for each of the two most recent fiscal years,
are located in, or derived from operations in, the United States, and (iii) which,
along with each of its domestic subsidiaries, satisfies the Collateral and
Guarantee Requirement as provided in Section 5.12 and (b) an
Acquisition by EnergySolutions or any of its Subsidiaries of a Special Purpose
Subsidiary.

 

“Permitted
Asset Sale” shall mean the sale by Parent, EnergySolutions or any of their
respective Subsidiaries of any part of its or their assets, including any
Equity Interests of Subsidiaries, as and to the extent permitted under Section 7.4.

 

“Permitted
Business” shall mean (a) all existing business operations of Parent
and its Subsidiaries conducted as of the Closing Date, as well as those
reasonably related thereto, including environmental services, and (b) any
reasonably related business in respect of the use and management of Hazardous
Material and Hazardous Material waste in accordance with Applicable Law, the
Licenses and the Necessary Authorizations.

 

“Permitted
Encumbrances” shall mean Permitted Liens other than those referred to in
clauses (a), (b), (h), (m), (n), (o), (q) and (r) of the definition
thereof.

 

“Permitted
Investments” shall mean Investments described in and permitted to be made
under Section 7.5.

 

“Permitted
Liens” shall mean, as applied to any Person:

 

(a)           Liens (i) for taxes and
assessments, judgments, governmental charges or levies or claims relating to
such taxes, in an aggregate amount not in excess of $500,000, (ii) on Real
Property for real estate taxes not yet due and (iii) for taxes,
assessments, judgments, governmental charges or levies or claims not overdue
for a period of not more than 30 days or the nonpayment of which is being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves have been set aside on such Person’s books, but only so long
as no foreclosure, distraint, sale or similar proceedings have been commenced
with respect thereto and remain unstayed for a period of 30 days after their
commencement;

 

(b)           Liens created under the Loan
Documents;

 

(c)           Liens of landlords, carriers,
warehousemen, mechanics, laborers and materialmen incurred in the ordinary
course of business for sums not yet overdue by more than 30 days or being
diligently contested in good faith, if reserves or appropriate provisions shall
have been made therefor in accordance with GAAP;

 

27

 

(d)           Liens incurred in the ordinary course
of business in connection with workers’ compensation, unemployment insurance
and social security insurance;

 

(e)           restrictions on the transfer of
assets imposed by any of the Licenses as now in effect or by any Environmental
Laws, any state laws and any regulations thereunder;

 

(f)            easements, rights-of-way,
restrictions and other similar encumbrances on the use of real property which
do not interfere with the ordinary conduct of the business of such Person, or
Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not incurred in connection with
Indebtedness or other extensions of credit and which do not in the aggregate
materially detract from the value of such properties or materially impair their
use in the operation of the business of such Person;

 

(g)           purchase money security interests
which are perfected automatically by operation of law, only for the period (not
to exceed 20 days) of automatic perfection under the law of the applicable
jurisdiction, and limited to Liens on assets so purchased;

 

(h)           cash collateralization of the
mark-to-market value of the Obligations under Secured Hedge Agreements in an
aggregate amount not to exceed $2,000,000;

 

(i)            any Liens of record listed on
Schedule 7.2 attached hereto;

 

(j)            Liens (i) of a collection bank
arising under Section 4-210 of the Uniform Commercial Code on items in the
course of collection and (ii) in favor of a banking institution arising as
a matter of law encumbering deposits (including the right of setoff) and which
are within the general parameters customary in the banking industry;

 

(k)           Liens arising from precautionary
Uniform Commercial Code financing statement filings regarding leases entered
into by the Loan Parties or any of their subsidiaries in the ordinary course of
business;

 

(l)            Liens existing on property at the
time of its acquisition or existing on the property of any Person that becomes
a Subsidiary; provided that (i) such Lien was not created in
contemplation of such acquisition or such Person becoming a Subsidiary, (ii) such
Lien does not extend to or cover any other assets or property (other than the
proceeds or products thereof) and (iii) the Indebtedness secured thereby
is permitted under Section 7.1;

 

(m)          other Liens securing Indebtedness
outstanding in an aggregate amount not to exceed $5,000,000;

 

(n)           Liens in favor of Exelon and its
permitted assigns on any Equity Interests of, ZionSolutions to secure
obligations of Parent and EnergySolutions to Exelon under the Zion Agreements; provided
that the Liens securing such obligations shall be created pursuant to
documentation reasonably satisfactory to the Administrative Agent;

 

(o)           Liens on the assets or properties of,
or on any Equity Interests of, any Special Purpose Subsidiary other than
ZionSolutions incurred as a result of the formation or acquisition of such
Special Purpose Subsidiary (i) pursuant to the SPS Project Documentation
of such 

 

28

 

Special
Purpose Subsidiary, (ii) in favor of the counterparty to such SPS Project
Documentation and (iii) to secure obligations in an aggregate amount not
to exceed $20,000,000 per Special Purpose Subsidiary and $50,000,000 in the
aggregate; and

 

(p)           easements granted solely for the
purpose of securing the availability of capacity at EnergySolutions’ Class A
low level radioactive disposal site in Clive, Utah for the disposal of Class A
low level radioactive waste in connection with the SPS Project Documentation of
any Special Purpose Subsidiary (including the Zion Agreements); provided
that (i) the aggregate space of all such easements granted pursuant to the
Zion Agreements shall not exceed 10% of the available aggregate space at such
Clive, Utah disposal site for the disposal of such radioactive waste and (ii) the
aggregate space of all such easements granted pursuant to the SPS Project
Documentation of any other Special Purpose Subsidiary shall not exceed 5% in
the case of any such Special Purpose Subsidiary, and shall not exceed 15% for
all such Special Purpose Subsidiaries taken together, in each case, of the
available aggregate space at such Clive, Utah disposal site for the disposal of
such radioactive waste;

 

(q)           leases, licenses, subleases or
sublicenses of or with respect to any real property granted to other Persons in
the ordinary course of business and not interfering in any material respect
with the business of Parent or its subsidiaries; and

 

(r)            any interest or title of a lessor,
licensee, sublicensee, licensor or sublicensor under any lease or license
agreement of or with respect to any real property granted in the ordinary
course of business.

 

“Permitted
Uses” shall mean (a) Investments made pursuant to Section 7.5(c)(x),
(b) Restricted Payments made pursuant to Section 7.7(b)(ii) and
expenditures and payments made pursuant to Section 7.7(c)(vii) and (c) Capital
Expenditures made pursuant to Section 7.15(b).

 

“Person”
shall mean an individual, corporation, limited liability company, association,
partnership, joint venture, trust or estate, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.

 

“Plan”
shall mean any employee pension benefit plan (other than a Multiemployer Plan)
as defined in Section 3(2) of ERISA, subject to Title IV of ERISA or Section 302
of ERISA or Section 412 of the Code, maintained or contributed to by
Parent, EnergySolutions, any of their respective Subsidiaries or any of their
respective ERISA Affiliates.

 

“Platform”
shall have the meaning set forth in Section 10.18(b).

 

“Post-Increase
Revolving Lenders” shall have the meaning set forth in Section 2.18(d).

 

“Pre-Increase
Revolving Lenders” shall have the meaning set forth in Section 2.18(d).

 

“Prime
Rate” shall mean the rate of interest per annum publicly announced from
time to time by JPMCB as its prime rate in effect at its principal office in
New York City.  Each change in the Prime
Rate shall be effective from and including the date such change is publicly
announced as being effective.

 

29

 

“Private
Side Lender Representatives” shall mean, with respect to any Lender,
representatives of such Lender that are not Public Side Lender Representatives.

 

“Property”
shall mean any property now or hereafter owned, operated or leased by Parent,
EnergySolutions or any of their respective Subsidiaries.

 

“Pro
Rata Share” shall mean, at any time, with respect to any Revolving Lender,
the percentage of the Aggregate Revolving Commitment represented by such Lender’s
Revolving Commitment at such time; provided that in the case of
Section 2.21, when a Defaulting Lender shall exist, “Pro Rata Share” shall
mean the percentage of the Aggregate Revolving Commitment (disregarding any
Defaulting Lender’s Revolving Commitment) represented by such Lender’s
Revolving Commitment.  If the Revolving
Commitments have terminated or expired, the Pro Rata Share of each Revolving
Lender shall be determined based upon the Revolving Commitments most recently
in effect, giving effect to any assignments.

 

“Public
Side Lender Representatives” shall mean, with respect to any Lender,
representatives of such Lender that do not wish to receive MNPI.

 

“Real
Property Acquisition” shall mean (whether by purchase, exchange, issuance
of capital stock, limited partnership interests, general partnership interests
or other equity or debt securities, merger, reorganization or any other method)
the acquisition by Parent, EnergySolutions or any of their respective
Subsidiaries of any interest in real property, whether done and made
individually or as part of a transaction including assets or property other
than real property.

 

“Recipient”
shall mean, as applicable, (a) the Administrative Agent, (b) any
Lender (and, in the case of a Lender that is classified as a partnership for
U.S. Federal tax purposes, a Person treated as the beneficial owner thereof for
U.S. Federal tax purposes), (c) any Issuing Bank and (d) any other
Person to which any obligation under any Loan Document is owed by any Loan
Party.

 

“Refinancing
Indebtedness” shall mean, in respect of any Indebtedness (the “Original
Indebtedness”), any Indebtedness that extends, renews or refinances such
Original Indebtedness (or any Refinancing Indebtedness in respect thereof); provided
that (a) the principal amount of such Refinancing Indebtedness shall not
exceed the principal amount of such Original Indebtedness except by an amount
no greater than accrued and unpaid interest with respect to such Original
Indebtedness and reasonable fees and expenses (including underwriting fees and
prepayment premiums not in excess of 4% that are contractually required to be
paid in connection with a refinancing but excluding make-whole payments and
premiums paid in connection with a tender offer for, or open market purchases
of, such Original Indebtedness) relating to such extension, renewal or
refinancing; (b) the stated final maturity of such Refinancing
Indebtedness shall not be earlier, and the weighted average life to maturity of
such Refinancing Indebtedness shall not be shorter, than that of such Original
Indebtedness, and such stated final maturity shall not be subject to any
conditions that could result in such stated final maturity occurring on a date
that precedes the stated final maturity of such Original Indebtedness; (c) such
Refinancing Indebtedness shall not be required to be repaid, prepaid, redeemed,
repurchased or defeased, whether on one or more fixed dates, upon the
occurrence of

 

30

 

 

 

one
or more events or at the option of any holder thereof (except, in each case,
upon the occurrence of an event of default or a change in control or as and to
the extent such repayment, prepayment, redemption, repurchase or defeasance
would have been required pursuant to the terms of such Original Indebtedness)
prior to the earlier of (i) the maturity of such Original Indebtedness and (ii)
the date 180 days after the Term Maturity Date; (d) such Refinancing
Indebtedness shall not constitute an obligation (including pursuant to a
Guarantee) of any Subsidiary that shall not have been (or, in the case of
after-acquired Subsidiaries, shall not have been required to become) an obligor
in respect of such Original Indebtedness, and shall not constitute an obligation
of Parent if Parent shall not have been an obligor in respect of such Original
Indebtedness, and, in each case, shall constitute an obligation of such
Subsidiary or of Parent only to the extent of their obligations in respect of
such Original Indebtedness; (e) if such Original Indebtedness shall have been
subordinated to the Obligations, such Refinancing Indebtedness shall also be
subordinated to the Obligations on terms not less favorable in any material
respect to the Lenders; and (f) such Refinancing Indebtedness shall not be
secured by any Lien on any asset other than the assets that secured such
Original Indebtedness (or would have been required to secure such Original
Indebtedness pursuant to the terms thereof) or, in the event Liens securing such
Original Indebtedness shall have been contractually subordinated to any Lien
securing the Obligations, by any Lien that shall not have been contractually
subordinated to at least the same extent. 
Notwithstanding the foregoing, any Refinancing Indebtedness in respect
of Additional Permitted Debt must also meet the requirements set forth in
clauses (a) through (e) of the definition of the term “Additional Permitted
Debt”.

 

“Register”
shall have the meaning set forth in Section 10.4(b).

 

“Related
Parties” shall mean, with respect to any specified Person, such Person’s
Affiliates and the directors, officers, partners, trustees, employees, agents
and advisors of such Person and of such Person’s Affiliates.

 

“Release”
shall mean the release, deposit, disposal, leakage, burial, discharge,
emission, injection, spillage, seepage, leaching, dumping, pumping, pouring,
escaping, emptying, migrating, placement and the like (including the disposal
of barrels, containers and other closed receptacles) into, within, through,
upon or under the environment (including any land, soils, subsurface strata,
water or indoor or outdoor air) or any building, structure facility or fixture.

 

“Remedial
Actions” shall mean all actions, including any capital expenditures,
undertaken to (a) clean up, remove, treat or in any other way address any
Hazardous Material; (b) prevent the Release or threat of Release, or minimize
the further Release, of any Hazardous Material so it does not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; (c) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (d) bring facilities on any property
owned, operated or leased by the Loan Parties and the facilities located and operations
conducted thereon into compliance with all Environmental Laws and Environmental
Permits.

 

“Reportable
Event” shall have the meaning set forth in Section 4043 of ERISA.

 

31

 

“Restricted
Debt Payment” shall mean any payment or other distribution by Parent,
EnergySolutions or any of their respective Subsidiaries of, or in respect of,
Indebtedness other than any such payment or distribution that is expressly
permitted by Section 7.7(c).

 

“Restricted
Payment” shall mean any direct or indirect distribution, dividend or other
payment (whether in cash, securities or other property) by Parent,
EnergySolutions or any of their respective Subsidiaries to any Person on
account of any Equity Interests of Parent, EnergySolutions or any of their
respective Subsidiaries.

 

“Revolving
Availability Period” shall mean the period from and including the Closing
Date to but excluding the Revolving Termination Date.

 

“Revolving
Commitment” shall mean, with respect to each Lender, the commitment, if
any, of such Lender to make Revolving Loans hereunder and to acquire
participations in Revolving Letters of Credit, expressed as an amount
representing the maximum aggregate permitted amount of such Lender’s Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to
time pursuant to Section 2.19, (b) increased from time to time pursuant to
Section 2.18 and (c) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 10.4.  The initial amount of each Lender’s Revolving
Commitment is set forth on Schedule 2.1, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Revolving
Commitment, as applicable.  As of the
Closing Date, the aggregate amount of the Lenders’ Revolving Commitments is
$105,000,000.

 

“Revolving
Exposure” shall mean, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Revolving Loans and such
Lender’s Revolving L/C Exposure at such time.

 

“Revolving
Issuing Bank” shall mean (a) each of JPMCB, CS and Citibank, (b) solely in
respect of any Existing Revolving Letter of Credit, the Revolving Lender that
is the issuer thereof, as set forth on Schedule 2.6, and (c) each Revolving
Lender that shall have become a Revolving Issuing Bank hereunder as provided in
Section 2.6(n) (other than any Person that shall have ceased to be a Revolving
Issuing Bank as provided in Section 2.6(o)), each in its capacity as an
issuer of Revolving Letters of Credit hereunder.  Each Revolving Issuing Bank may, in its
discretion, arrange for one or more Revolving Letters of Credit to be issued by
Affiliates of such Revolving Issuing Bank, in which case the term “Revolving
Issuing Bank” shall include any such Affiliate with respect to Revolving
Letters of Credit issued by such Affiliate (it being agreed that such Revolving
Issuing Bank shall, or shall cause such Affiliate to, comply with the
requirements of Section 2.6 with respect to such Revolving Letters of Credit).

 

“Revolving
L/C Cash Collateral Account” shall have the meaning set forth in
Section 2.6(l).

 

“Revolving
L/C Disbursement” shall mean a payment or disbursement made by a Revolving
Issuing Bank pursuant to a Revolving Letter of Credit.  In the event that a Revolving L/C
Disbursement is not reimbursed by EnergySolutions as provided in Section 2.6(h)
and the Revolving Lenders fund participations in such Revolving L/C
Disbursement as provided in Section 2.6(f), the amount of such Revolving L/D Disbursement
shall for all purposes hereof be 

 

32

 

deemed
to be the aggregate U.S. Dollar amount funded by the Revolving Lenders pursuant
to Section 2.6(f).

 

“Revolving
L/C Exposure” shall mean, at any time, the sum of (a) the sum of the Dollar
Equivalents of the undrawn amounts of all outstanding Revolving Letters of
Credit at such time and (b) the sum of the Dollar Equivalents of all Revolving
L/C Disbursements that have not yet been reimbursed by or on behalf of
EnergySolutions at such time.  The
Revolving L/C Exposure of any Revolving Lender at any time shall be its Pro
Rata Share of the total Revolving L/C Exposure at such time.

 

“Revolving
L/C Share” shall mean, with respect each of JPMCB, CS and Citibank in its
capacity as a Revolving Issuing Bank, (a) 39%, in the case of JPMCB, (b) 33%,
in the case of CS, and (c) 28%, in the case of Citibank, of the Revolving L/C
Specified Amount.

 

“Revolving
L/C Specified Amount”, at any time, shall mean the lesser of (a) $100,000,000
and (b) the Aggregate Revolving Commitment at such time.

 

“Revolving
Lender” shall mean a Lender with a Revolving Commitment or a Revolving
Exposure.

 

“Revolving
Letter of Credit” shall mean any standby letter of credit issued pursuant
to Section 2.6(a) and any Existing Revolving Letter of Credit, other than
any such letter of credit that shall have ceased to be a “Revolving Letter of
Credit” outstanding hereunder pursuant to Section 10.14.

 

“Revolving
Loans” shall mean the revolving loans made by the Lenders to
EnergySolutions pursuant to Section 2.1(b) and shall include, unless the
context otherwise requires, any Incremental Revolving Loans.

 

“Revolving
Maturity Date” shall mean the fifth anniversary of the date of this
Agreement.

 

“Revolving
Termination Date” shall mean the earlier of (a) the Revolving Maturity Date
and (b) the date of termination or expiration of the Revolving Commitments.

 

“S&P”
shall mean Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor to its rating agency business.

 

“SEC”
shall mean the United States Securities and Exchange Commission.

 

“Secured
Hedge Agreement” shall have the meaning set forth in the Guarantee and
Collateral Agreement.

 

“Secured
Leverage Ratio” shall mean, as of any calculation date, on a consolidated
basis for Parent and its Subsidiaries, the ratio of Indebtedness for Money
Borrowed that is secured by a Lien on any asset or property of Parent and its
consolidated Subsidiaries as of such calculation date to Consolidated Adjusted
EBITDA for the period of four consecutive fiscal quarters most recently ended
on or prior to such calculation date.

 

33

 

“Secured
Obligations” shall have the meaning set forth in the Guarantee and
Collateral Agreement.

 

“Secured
Parties” shall have the meaning set forth in the Guarantee and Collateral
Agreement.

 

“Securities
Act” shall mean the United States Securities Act of 1933.

 

“Security
Documents” shall mean the Guarantee and Collateral Agreement, the IP
Security Agreements, the Mortgages, the Control Agreements, the Foreign Pledge
Agreements, if any, and any other agreement or instrument providing collateral
to the Administrative Agent, for the benefit of the Secured Parties, securing
the Secured Obligations, whether now or hereafter in existence, and any
filings, instruments, agreements and documents related thereto.

 

“Security
Interest” shall mean all Liens in favor of the Administrative Agent, for
itself and for the benefit of the Secured Parties, created hereunder or under
any of the Security Documents to secure the Secured Obligations.

 

“Senior
Notes” shall mean the Senior Unsecured Notes due 2018, to be issued by
Parent and EnergySolutions on or prior to the Closing Date, and the
Indebtedness represented thereby.

 

“Senior
Notes Documents” shall mean the indenture under which the Senior Notes (or
any Refinancing Indebtedness in respect thereof) are issued and all other
instruments, agreements and other documents evidencing or governing the Senior
Notes or providing for any Guarantee or other right in respect thereof.

 

“Solvent”
shall mean, with respect to any Loan Party as of any date of determination,
that (a) the sum of such Loan Party’s liabilities (including contingent liabilities)
does not exceed the present fair saleable value of such Loan Party’s assets;
(b) such Loan Party’s capital is not unreasonably small in relation to its
business as contemplated on such date of determination or with respect to any
transaction contemplated or undertaken on or after such date of determination;
(c) such Loan Party has not incurred and does not intend to incur, or believe
(nor should it reasonably believe) that it will incur, debts beyond its ability
to pay such debts as they become due (whether at maturity or otherwise); and
(d) such Loan Party is “solvent” within the meaning given to that term and
similar terms under applicable laws relating to fraudulent transfers and
conveyances.  For purposes of this
definition, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability (irrespective of whether such contingent
liabilities meet the criteria for accrual under Statement of Financial
Accounting Standards No. 5).

 

“Special
Purpose Subsidiary” shall mean (a) ZionSolutions and (b) no more than five
other Subsidiaries, each of which (i) is a wholly owned Subsidiary of
EnergySolutions (other than with respect to directors’ qualifying shares or de
minimis non-economic interests held by the transferor of the assets to such
Subsidiary pursuant to the applicable SPS Project Documentation (as defined
below) of such Subsidiary), (ii) has been designated with reasonable prior
notice by EnergySolutions to the Administrative Agent as a Special Purpose
Subsidiary and (iii) has been formed for the purpose of entering into one or
more contracts (such contracts and 

 

34

 

all
related documentation, together with the Zion Agreements, the “SPS Project
Documentation”) to decommission nuclear or other power facilities whereby
any such Subsidiary purchases and/or leases all or part of the assets of such
facilities in part to succeed to licenses or permits granted in respect of such
facilities by the United States Nuclear Regulatory Commission or any other
Federal or state governmental entity.

 

“SPS
Project Documentation” shall have the meaning set forth in the definition
of the term “Special Purpose Subsidiary”.

 

“Stated
Amount” of any Letter of Credit shall mean the maximum amount from time to
time available to be drawn thereunder, determined without regard to whether any
conditions to drawing could then be met.

 

“Sterling”
or “£” shall mean the lawful currency of the United Kingdom.

 

“Subordinated
Indebtedness” of any Person shall mean any Indebtedness of such Person that
is subordinated in right of payment to any other Indebtedness of such Person.

 

“Subordination
Agreement” shall mean a subordination agreement among the Loan Parties,
certain other subordinated lenders and the Administrative Agent substantially
in the form of Exhibit I.

 

“subsidiary”
shall mean, with respect to any Person (the “parent”) at any date, (a) any
Person the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date and (b) any other Person
of which Equity Interests representing more than 50% of the equity value or
more than 50% of the ordinary voting power or, in the case of a partnership,
more than 50% of the general partnership interests are, as of such date, owned,
controlled or held.

 

“Subsidiary”
shall mean any subsidiary of Parent or EnergySolutions, as applicable
(including any subsidiary of any Subsidiary of Parent or EnergySolutions, as
applicable).

 

“Subsidiary
Guarantor” shall mean each Domestic Subsidiary of EnergySolutions that
guarantees the Secured Obligations in accordance with the terms of this
Agreement.

 

“Tax
Distributions” shall mean (1) the amount of Parent’s tax liability,
provided that such distributions are actually used for such purpose, or (2) at
any time Parent owns any assets other than Equity Interests in EnergySolutions,
the sum of (but without duplication for) (i) the amount of tax payable by
Parent as a result of the operations of EnergySolutions and its Subsidiaries
and (ii) the amount of taxes required of Parent in order to maintain Parent’s
corporate existence, provided that such distributions are actually used for
such purpose.

 

“Taxes”
shall have the meaning set forth in Section 2.17(a).

 

“Term
Commitment” shall mean, with respect to each Lender, the commitment, if
any, of such Lender to make Term Loans hereunder, expressed as an amount
representing the maximum principal amount of Term Loans to be made by such
Lender, as such commitment may be 

 

35

 

(a) reduced
from time to time pursuant to Section 2.19, (b) increased from time to
time pursuant to Section 2.18 and (c) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 10.4.  The initial amount of each Lender’s Term
Commitment is set forth on Schedule 2.1, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Term
Commitment, as applicable.  As of the
Closing Date, the aggregate amount of the Lenders’ Term Commitments is
$560,000,000.

 

“Term
Lender” shall mean a Lender with a Term Commitment or an outstanding Term
Loan.

 

“Term
Loans” shall mean the term loans made by the Lenders to EnergySolutions
pursuant to Section 2.1(a) and shall include, unless the context otherwise
requires, any Incremental Term Loans.

 

“Term
Maturity Date” shall mean the sixth anniversary of the date of this
Agreement.

 

“Transactions”
shall mean (a) the execution, delivery and performance by each Loan Party of
the Loan Documents to which it is to be a party, the borrowing of Loans, the
use of the proceeds thereof and the issuance of Letters of Credit hereunder and
(b) the execution, delivery and performance by each Loan Party of the Senior
Notes Documents to which it is to be a party, the issuance of the Senior Notes
and the use of the proceeds thereof.

 

“Type”,
when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined
by reference to the Adjusted Eurodollar Rate or the Alternate Base Rate.

 

“Uniform
Commercial Code” or “UCC” shall mean the Uniform Commercial Code as
the same may from time to time be in effect in the State of New York or the
Uniform Commercial Code (or similar code or statute) of another jurisdiction,
to the extent it may be required to apply to any item or items of Collateral.

 

“U.S.
Dollars” or “$” shall mean the lawful currency of the United States
of America.

 

“wholly
owned”, when used in reference to a subsidiary of any Person, shall mean
that all the Equity Interests in such subsidiary (other than directors’
qualifying shares and other nominal amounts of Equity Interests that are
required to be held by other Persons under applicable law) are owned,
beneficially and of record, by such Person, another wholly owned Subsidiary of
such Person or any combination thereof.

 

“Withholding
Agent” shall mean each of EnergySolutions and the Administrative Agent.

 

“Yield
Differential” shall have the meaning set forth in Section 2.18(b).

 

“Zion
Acquisition” shall have the meaning set forth in the recitals hereto.

 

“Zion
Agreements” shall mean, collectively, the following documents (each in the
form delivered to the Administrative Agent on August 11, 2010 except as
otherwise permitted in clause (o) below): (a) the ZionSolutions Limited
Liability Company Agreement entered into by 

 

36

 

the
members of ZionSolutions, (b) the Asset Sale Agreement (and the amendment
thereto dated as of August 17, 2009), (c) an Assignment and Assumption
Agreement to be entered into by and between Exelon and ZionSolutions, (d) a
Bill of Sale to be entered into by and between Exelon and ZionSolutions, (e) a
Lease Agreement to be entered into by and between Exelon and ZionSolutions, (f)
a Put Option Agreement to be entered into by and between Exelon and
ZionSolutions, (g) a Pledge Agreement made by EnergySolutions in favor of
Exelon, (h) the Guaranty made as of December 11, 2007 by Parent in favor of
Exelon, (i) an Irrevocable Easement for Disposal Capacity to be made by
EnergySolutions to a certain trustee named thereto, (j) a Disposal Services
Agreement to be entered into by and between EnergySolutions and a certain
trustee named thereto, (k) a Leased Personnel Agreement to be entered into by
and between Exelon and ZionSolutions, (l) the Performance Guaranty made as of
December 11, 2007 by EnergySolutions in favor of Exelon, (m) a Trust
Agreement by and among EnergySolutions, a trustee named thereto and other parties
party thereto in connection with a backup non-qualified decommissioning trust
fund, (n) a Credit Support Agreement among Exelon, EnergySolutions and Parent
and (o) all amendments or modifications to any of the agreements listed in the
foregoing clauses (a) through (n) to the extent such amendments or
modifications are delivered to the Administrative Agent not later than 10
Business Days prior to becoming effective and, to the extent such amendments or
modifications could reasonably be expected to adversely affect the interests of
the Lenders in any material respect, the Administrative Agent has consented
thereto in writing (it being understood that any modification, amendment or
waiver of any Zion Agreement that increases the amount of Indebtedness of Parent,
EnergySolutions or their respective Subsidiaries pursuant to such Zion
Agreement shall be deemed to adversely affect the interests of the Lenders in a
material respect).  All capitalized terms
in this paragraph not otherwise defined herein shall have the meanings ascribed
to such terms in the Asset Sale Agreement dated as of December 11, 2007, by and
among Exelon, ZionSolutions, EnergySolutions and Parent, as in effect on the
Closing Date.

 

“ZionSolutions”
shall mean ZionSolutions, LLC, a Delaware limited liability company organized
for the purpose of consummating the Zion Acquisition.

 

SECTION
1.2  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  The words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all real
and personal, tangible and intangible assets and properties, including cash,
securities, accounts and contract rights. 
The word “law” shall be construed as referring to all statutes, rules,
regulations, codes and other laws (including official rulings and
interpretations thereunder having the force of law or with which affected
Persons customarily comply), and all judgments, orders, writs and decrees, of
all Governmental Authorities.  Unless the
context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document (including this Agreement and the other
Loan Documents) shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any definition of or reference to any
statute, rule or regulation shall be construed as referring thereto as from
time to time amended, 

 

37

 

supplemented or otherwise
modified (including by succession of comparable successor laws), (c) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns (subject to any restrictions on assignment set forth
herein) and, in the case of any Governmental Authority, any other Governmental
Authority that shall have succeeded to any or all functions thereof, (d) the
words “herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof and (e) all references herein to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement.

 

SECTION
1.3  Accounting Terms.  Except as otherwise expressly provided herein,
all terms of an accounting or financial nature used herein shall be construed
in accordance with GAAP as in effect from time to time; provided that
(i) if EnergySolutions by notice to the Administrative Agent, shall request an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent or the Majority
Lenders, by notice to EnergySolutions, shall request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and applied
immediately before such change shall have become effective until such notice
shall have been withdrawn or such provision amended in accordance herewith and
(ii)  notwithstanding any other provision
contained herein, all terms of an accounting or financial nature used herein
shall be construed, and all computations of amounts and ratios referred to
herein shall be made, without giving effect to any election under Statement of
Financial Accounting Standards 159, The Fair Value Option for Financial Assets and
Financial Liabilities, or any successor thereto (including pursuant to the
Accounting Standards Codification), to value any Indebtedness of Parent or any
Subsidiary at “fair value”, as defined therein.

 

SECTION
1.4  Pro Forma Calculations.  For purposes of computing each of the
Leverage Ratio, Secured Leverage Ratio and the Interest Coverage Ratio for any
purpose hereunder, such ratio (and any financial calculations or components
required to be made or included therein) shall be determined, with respect to
the relevant period, after giving pro forma effect to each Permitted
Acquisition and disposition of a Person, line of business or division
consummated during such period (including, in each case, any incurrence,
assumption, refinancing or repayment of Indebtedness for Money Borrowed), as if
such Permitted Acquisition, disposition or related transactions had been
consummated on the first day of such period, in each case, either
(a) prepared in accordance with Regulation S-X under the Securities Act or
(b)(i) that have been certified by a financial officer of EnergySolutions as
having been prepared in good faith based upon reasonable assumptions and (ii)
are reasonably acceptable to the Administrative Agent.  If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest on such Indebtedness
shall be calculated as if the rate in effect on the date of determination had
been the applicable rate for the entire period (taking into account any Hedging
Agreement applicable to such Indebtedness if such Hedging Agreement has a
remaining term in excess of 12 months).

 

SECTION
1.5  Currency Translation.  The Administrative Agent shall determine the
Dollar Equivalent of any Letter of Credit denominated in an Available Foreign
Currency as of (a) a date on or about the date on which the applicable Issuing
Bank receives a request from 

 

38

 

EnergySolutions for the
issuance of such Letter of Credit, (b) each subsequent date on which such Letter
of Credit shall be renewed or extended or the stated amount thereof shall be
increased, (c) on the last Business Day of each subsequent calendar month and
(d) at such other times as designated by the Administrative Agent, in each case
using the Exchange Rate for such currency in relation to U.S. Dollars in effect
on the date of determination.  Each
amount determined as aforesaid shall, except as provided in the last two
sentences of this Section 1.5, be the Dollar Equivalent of the applicable
Letter of Credit until the next required calculation thereof pursuant to the
preceding sentence of this paragraph. 
The Administrative Agent shall in addition determine the Dollar
Equivalent of any Letter of Credit denominated in an Available Foreign Currency
as provided in Sections 2.6(h) and 2.6(i). 
The Administrative Agent shall notify EnergySolutions and the applicable
Issuing Bank of each calculation of the Dollar Equivalent of each Letter of
Credit denominated in an Available Foreign Currency.  Notwithstanding the foregoing, for purposes
of any determination under Article V, Article VI, Article VII (other than
Section 7.6) or Article VIII or any determination under any other provision of
this Agreement expressly requiring the use of a current exchange rate, all
amounts incurred, outstanding or proposed to be incurred or outstanding in
currencies other than U.S. Dollars shall be translated into U.S. Dollars at
currency exchange rates in effect on the date of such determination; provided,
however, that for purposes of determining compliance with Article VII
with respect to the amount of any Indebtedness, Investment, disposition of
assets or Restricted Payment in a currency other than U.S. Dollars, no Default
or Event of Default shall be deemed to have occurred solely as a result of
changes in the Exchange Rate occurring after the time such Indebtedness,
Investment, disposition or Restricted Payment is incurred or made; provided
further that, for the avoidance of doubt, the foregoing provisions of
this Section 1.5 shall otherwise apply to such Sections, including with respect
to determining whether any Indebtedness, Investment, disposition or Restricted
Payment may be incurred or made at any time under such Sections.  For purposes of Sections 2.18(b)(iii) and
7.6, amounts in currencies other than U.S. Dollars shall be translated into
U.S. Dollars at the currency exchange rates used in preparing Parent’s most
recently delivered financial statements.

 

ARTICLE
II

 

The
Credits

 

SECTION 2.1  Commitments
and Loans.  Subject to the terms and
conditions set forth herein, each Lender agrees to make (a) a Term Loan
denominated in U.S. Dollars to EnergySolutions on the Closing Date in a
principal amount not exceeding such Lender’s Term Commitment and
(b) Revolving Loans denominated in U.S. Dollars to EnergySolutions from
time to time during the Revolving Availability Period in an aggregate principal
amount that will not result in such Lender’s Revolving Exposure exceeding such
Lender’s Revolving Commitment or the Aggregate Revolving Exposure exceeding the
Aggregate Revolving Commitment.  Within
the foregoing limits and subject to the terms and conditions set forth herein,
EnergySolutions may borrow, prepay and reborrow Revolving Loans.  Amounts repaid or prepaid in respect of Term
Loans may not be reborrowed.

 

SECTION
2.2  Manner of Borrowing and
Disbursement.  (a)  Each
Loan shall be made as part of a Borrowing consisting of Loans of the same Class
and Type made by the Lenders ratably in accordance with their respective
Commitments of the applicable Class.  The
failure of any 

 

39

 

Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and
no Lender shall be responsible for any other Lender’s failure to make Loans as
required.

 

(b)           Subject to Section 2.7(c), each Term
Borrowing and each Revolving Borrowing shall be comprised entirely of Base Rate
Loans or Eurodollar Loans as EnergySolutions may request in accordance
herewith; provided that all Borrowings made on the Closing Date must be
made as Base Rate Borrowings unless EnergySolutions shall have given the notice
required for a Eurodollar Borrowing under Section 2.3 and provided an
indemnity letter, in form and substance reasonably satisfactory to the
Administrative Agent, extending the benefits of Section 2.14 to Lenders in
respect of such Borrowings.  Each Lender
at its option may make any Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of EnergySolutions to repay such
Loan in accordance with the terms of this Agreement.

 

(c)           At the commencement of each Interest
Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate
amount that is, in the case of a Term Borrowing, an integral multiple of
$1,000,000 and not less than $5,000,000, and in the case of a Revolving
Borrowing, an integral multiple of $100,000 and not less than $500,000; provided
that a Eurodollar Borrowing that results from the continuation of an
outstanding Eurodollar Borrowing may be in an aggregate amount that is equal to
such outstanding Borrowing.  At the time
that each Base Rate Borrowing is made, such Borrowing shall be in an aggregate
amount that is, in the case of a Term Borrowing, an integral multiple of
$1,000,000 and not less than $5,000,000, and in the case of a Revolving
Borrowing, an integral multiple of $100,000 and not less than $500,000; provided
that a Base Rate Revolving Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the Aggregate Revolving Commitment or
that is required to finance the reimbursement of a Revolving L/C Disbursement
as contemplated by Section 2.6(h). 
Borrowings of more than one Type and Class may be outstanding at the
same time; provided that there shall not at any time be more than a
total of eight Eurodollar Borrowings outstanding.

 

(d)           Notwithstanding any other provision
of this Agreement, EnergySolutions shall not be entitled to request, or to
elect to convert to or continue, any Eurodollar Borrowing if the Interest
Period requested with respect thereto would end after the Term Maturity Date or
the Revolving Maturity Date, as applicable.

 

SECTION
2.3  Requests for Borrowings.  To request a Borrowing hereunder,
EnergySolutions shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,
New York City time, three Business Days before the date of the proposed
Borrowing (or, in the case of any Eurodollar Borrowing to be made on the
Closing Date, such shorter period of time as may be agreed to by the
Administrative Agent) or (b) in the case of a Base Rate Borrowing, not
later than 11:00 a.m., New York City time, on the day of the proposed
Borrowing.  Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery, facsimile or other electronic transmission to the Administrative
Agent of an executed written Borrowing Request. 
Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.2:

 

40

 

(a)           whether the requested Borrowing is to
be a Term Borrowing or a Revolving Borrowing;

 

(b)           the aggregate amount of such
Borrowing;

 

(c)           the date of such Borrowing, which
shall be a Business Day;

 

(d)           whether such Borrowing is to be a
Base Rate Borrowing or a Eurodollar Borrowing;

 

(e)           in the case of a Eurodollar
Borrowing, the initial Interest Period to be applicable thereto, which shall be
a period contemplated by the definition of the term “Interest Period”; and

 

(f)            the location and number of the account
of EnergySolutions to which funds are to be disbursed or, in the case of any
Base Rate Revolving Borrowing requested to finance the reimbursement of a
Revolving L/C Disbursement as provided in Section 2.6(h), the identity of
the Revolving Issuing Bank that made such Revolving L/C Disbursement.

 

If
no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be a Base Rate Borrowing. 
If no Interest Period is specified with respect to any requested
Eurodollar Borrowing, then EnergySolutions shall be deemed to have selected an
Interest Period of one month’s duration. 
Promptly following receipt of a Borrowing Request in accordance with
this Section 2.3, the Administrative Agent shall advise each Lender of the
applicable Class of the details thereof and of the amount of such Lender’s
Loan to be made as part of the requested Borrowing.

 

SECTION 2.4  Funding of Borrowings.  (a)  Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer
of immediately available funds by 12:00 noon, New York City time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders.  The
Administrative Agent will make such Loans available to EnergySolutions by
promptly remitting the amounts so received, in like funds, to an account of
EnergySolutions or, in the case of Base Rate Revolving Loans made to finance
the reimbursement of a Revolving L/C Disbursement as provided in
Section 2.6(h), to the Revolving Issuing Bank specified by EnergySolutions
in the applicable Borrowing Request.

 

(b)           Unless the Administrative Agent shall
have received notice from a Lender prior to the proposed date of any Borrowing
that such Lender will not make available to the Administrative Agent such
Lender’s share of such Borrowing, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with paragraph (a) of
this Section 2.4 and may, in reliance on such assumption, make available
to EnergySolutions a corresponding amount. 
In such event, if a Lender has not in fact made its share of the
applicable Borrowing available to the Administrative Agent, then the applicable
Lender and EnergySolutions severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to
EnergySolutions to but excluding the date of payment to the Administrative
Agent, at (i) in the case of a payment to be made by such Lender, the
greater of the Federal Funds Rate and a rate determined by the Administrative
Agent in accordance with 

 

41

 

banking industry rules on
interbank compensation or (ii) in the case of a payment to be made by
EnergySolutions, the interest rate applicable to Base Rate Revolving
Loans.  If such Lender pays such amount
to the Administrative Agent, then such amount shall constitute such Lender’s
Loan included in such Borrowing.

 

SECTION 2.5  Interest Elections.  (a)  Each Borrowing initially shall
be of the Type and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in the applicable Borrowing Request or as
otherwise provided in Section 2.3. 
Thereafter, EnergySolutions may elect to convert such Borrowing to a
Borrowing of a different Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.5.  EnergySolutions
may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.

 

(b)           To make an election pursuant to this Section 2.5,
EnergySolutions shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under
Section 2.3 if EnergySolutions were requesting a Revolving Borrowing of
the Type resulting from such election to be made on the effective date of such
election.  Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery, facsimile or other electronic transmission to the Administrative
Agent of an executed written Interest Election Request.  Each telephonic and written Interest Election
Request shall specify the following information in compliance with
Section 2.2:

 

(i)            the Borrowing to which such Interest
Election Request applies and, if different options are being elected with
respect to different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);

 

(ii)           the effective date of the election
made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)          whether the resulting Borrowing is to
be a Base Rate Borrowing or a Eurodollar Borrowing; and

 

(iv)          if the resulting Borrowing is to be a
Eurodollar Borrowing, the Interest Period to be applicable thereto after giving
effect to such election, which shall be a period contemplated by the definition
of the term “Interest Period”.

 

If
any such Interest Election Request requests a Eurodollar Borrowing but does not
specify an Interest Period, then EnergySolutions shall be deemed to have
selected an Interest Period of one month’s duration.

 

(c)           Promptly following receipt of an
Interest Election Request in accordance with this Section 2.5, the
Administrative Agent shall advise each Lender of the applicable Class of
the details thereof and of such Lender’s portion of each resulting Borrowing.

 

42

 

(d)           If EnergySolutions fails to deliver a
timely Interest Election Request with respect to a Eurodollar Borrowing prior
to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall (i) in the case of a Term Borrowing, be continued as a
Eurodollar Borrowing for an additional Interest Period of one month or (ii) in
the case of a Revolving Borrowing, be converted to a Base Rate Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred, then so long as such Event of
Default is continuing and without any further action by any party, (x) no
outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (y) unless repaid, each Eurodollar Borrowing shall be
converted to a Base Rate Borrowing at the end of the Interest Period applicable
thereto.

 

SECTION 2.6  Letters of Credit.  (a)  Revolving Letters of Credit.  Subject to the terms and conditions set forth
herein, EnergySolutions may request the issuance of letters of credit (“Revolving
Letters of Credit”) for its own account or, so long as EnergySolutions is a
joint and several co-applicant with respect thereto, the account of any of its
Subsidiaries, denominated in U.S. Dollars and, to the extent agreed to by the
applicable Revolving Issuing Bank, any Available Foreign Currency, and in a
form reasonably acceptable to the Administrative Agent and the applicable
Revolving Issuing Bank, at any time and from time to time during the Revolving
Availability Period.  Each Existing
Letter of Credit designated as a “Revolving Letter of Credit” on
Schedule 2.6 shall be deemed, for all purposes of this Agreement
(including paragraphs (f) and (h) of this Section 2.6), to be a
Revolving Letter of Credit issued hereunder. 
EnergySolutions unconditionally and irrevocably agrees that, in
connection with any Revolving Letter of Credit issued for the account of any of
its Subsidiaries as provided in the first sentence of this paragraph, it will
be fully responsible for the reimbursement of Revolving L/C Disbursements, the
payment of interest thereon and the payment of fees due under Section 2.9
to the same extent as if it were the sole account party in respect of such
Revolving Letter of Credit. 
Notwithstanding anything contained in any letter of credit application
furnished to any Revolving Issuing Bank in connection with the issuance of any
Revolving Letter of Credit, (i) all provisions of such letter of credit
application purporting to grant liens in favor of the Revolving Issuing Bank to
secure obligations in respect of such Revolving Letter of Credit shall be
disregarded, it being agreed that such obligations shall be secured to the
extent provided in this Agreement and in the Security Documents and (ii) in
the event of any inconsistency between the terms and conditions of such letter
of credit application and the terms and conditions of this Agreement, the terms
and conditions of this Agreement shall control.

 

(b)           Deposit Letters of Credit.  Subject to the terms and conditions set forth
herein, EnergySolutions may request the issuance of letters of credit (“Deposit
Letters of Credit”) for its own account or, so long as EnergySolutions is a
joint and several co-applicant with respect thereto, the account of any of its
Subsidiaries, denominated in U.S. Dollars and, to the extent agreed to by the
applicable Deposit Issuing Bank, any Available Foreign Currency, and in a form
reasonably acceptable to the Administrative Agent and the applicable Deposit
Issuing Bank, at any time and from time to time during the period from and
including the Closing Date to but excluding the date on which the Deposit L/C Specified
Amount is cancelled or permanently reduced to zero in accordance with Section 2.19.  Each Existing Letter of Credit designated as
a “Deposit Letter of Credit” on Schedule 2.6 shall be deemed, for all purposes
of this Agreement (including paragraph (i) of this Section 2.6),
to be a Deposit Letter of Credit issued hereunder.  EnergySolutions unconditionally and
irrevocably agrees that, in connection with any Deposit 

 

43

 

Letter of Credit issued for the account of any of
its Subsidiaries as provided in the first sentence of this paragraph, it will
be fully responsible for the reimbursement of Deposit L/C Disbursements, the
payment of interest thereon and the payment of fees due under Section 2.9
to the same extent as if it were the sole account party in respect of such
Deposit Letter of Credit. 
Notwithstanding anything contained in any letter of credit application
furnished to any Deposit Issuing Bank in connection with the issuance of any
Deposit Letter of Credit, (i) all provisions of such letter of credit
application purporting to grant liens in favor of the Deposit Issuing Bank to
secure obligations in respect of such Deposit Letter of Credit shall be
disregarded, it being agreed that such obligations shall be secured to the
extent provided in this Agreement and in the Security Documents and (ii) in
the event of any inconsistency between the terms and conditions of such letter
of credit application and the terms and conditions of this Agreement, the terms
and conditions of this Agreement shall control.

 

(c)           Notice of Issuance, Amendment,
Renewal, Extension.  To request the
issuance of a Letter of Credit or the amendment, renewal or extension of an
outstanding Letter of Credit, EnergySolutions shall hand deliver or fax (or
transmit by electronic communication, if arrangements for doing so have been
approved by the recipient) to the applicable Issuing Bank and the
Administrative Agent, at least five Business Days prior to the requested date
of issuance, amendment, renewal or extension, a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying whether such Letter of Credit is to be a
Revolving Letter of Credit or a Deposit Letter of Credit, the requested date of
issuance, amendment, renewal or extension (which shall be a Business Day), the
date on which such Letter of Credit is to expire (which shall comply with
paragraph (e) of this Section 2.6), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to enable the applicable Issuing Bank to
prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank,
EnergySolutions also shall submit a letter of credit application on such
Issuing Bank’s standard form in connection with any such request.

 

(d)           Conditions.  A Revolving Letter of Credit shall be issued,
amended, renewed or extended only if (and upon each issuance, amendment,
renewal or extension of any Revolving Letter of Credit EnergySolutions shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension, (i) the Revolving L/C Exposure will not
exceed the Revolving L/C Specified Amount, (ii) the Aggregate Revolving
Exposure will not exceed the Aggregate Revolving Commitment and (iii) the
Revolving L/C Exposure attributable to Revolving Letters of Credit issued by
any Revolving Issuing Bank will not exceed such Revolving Issuing Bank’s
Revolving L/C Share, unless otherwise agreed to by such Revolving Issuing
Bank.  A Deposit Letter of Credit shall
be issued, amended, renewed or extended only if (and upon each issuance,
amendment, renewal or extension of any Deposit Letter of Credit EnergySolutions
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension, the Deposit L/C Exposure will not
exceed the lesser of (i) the Deposit L/C Specified Amount and (ii) the
Deposit L/C Escrow Account Balance.  The
applicable Issuing Bank agrees that it shall not permit any issuance,
amendment, renewal or extension of any Letter of Credit to occur unless it
shall have given to the Administrative Agent written notice thereof required
under paragraph (c) of this Section 2.6.

 

44

 

(e)           Expiration Date.  Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year
after the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and
(ii) the date that is five Business Days prior to (A) in the case of
a Revolving Letter of Credit, the Revolving Maturity Date and (B) in the
case of a Deposit Letter of Credit, the Term Maturity Date; provided
that any Letter of Credit may contain customary automatic renewal provisions
agreed upon by EnergySolutions and the applicable Issuing Bank pursuant to
which the expiration date of such Letter of Credit shall automatically be
extended for a period of up to 12 months (but not to a date later than the date
set forth in clause (ii) above), subject to a right on the part of such
Issuing Bank to prevent any such renewal from occurring by giving notice to the
beneficiary in advance of any such renewal.

 

(f)            Participations in Revolving
Letters of Credit.  By the issuance
of a Revolving Letter of Credit (or an amendment to a Revolving Letter of
Credit increasing the amount thereof) and without any further action on the
part of the applicable Revolving Issuing Bank or any Revolving Lender, the
Revolving Issuing Bank that is the issuer thereof hereby grants to each
Revolving Lender, and each Revolving Lender hereby acquires from such Revolving
Issuing Bank, a participation in such Revolving Letter of Credit equal to such
Revolving Lender’s Pro Rata Share of the Stated Amount of such Revolving Letter
of Credit.  In consideration and in
furtherance of the foregoing, each Revolving Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
such Revolving Issuing Bank, such Revolving Lender’s Pro Rata Share of each
Revolving L/C Disbursement made by such Revolving Issuing Bank under such
Revolving Letter of Credit and not reimbursed by EnergySolutions on the date
due as provided in paragraph (h) of this Section 2.6, or of any
reimbursement payment required to be refunded to EnergySolutions for any
reason.  Such payment by the Revolving
Lenders shall be made (i) if the currency of the applicable Revolving L/C
Disbursement shall be U.S. Dollars, then in U.S. Dollars and (ii) if the
currency of the applicable Revolving L/C Disbursement shall be an Available
Foreign Currency, in an amount of U.S. Dollars, calculated by the
Administrative Agent based on current exchange rates on the applicable L/C
Calculation Date, sufficient to enable the Administrative Agent to purchase an
amount of such Available Foreign Currency equal to the amount of such Revolving
L/C Disbursement.  Each Revolving Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Revolving Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Revolving Letter of Credit
or the occurrence and continuance of a Default or any reduction or termination
of the Revolving Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.  Each Revolving Lender further acknowledges
and agrees that, in issuing, amending, renewing or extending any Revolving
Letter of Credit, the applicable Revolving Issuing Bank shall be entitled to
rely, and shall not incur any liability for relying, upon the representation
and warranty of Parent and EnergySolutions deemed made pursuant to Section 3.2,
unless, at least one Business Day prior to the time such Revolving Letter of
Credit is issued, amended, renewed or extended, the Majority in Interest of the
Revolving Lenders shall have notified the applicable Revolving Issuing Bank
(with a copy to the Administrative Agent) in writing that, as a result of one
or more events or circumstances described in such notice, one or more of the
conditions precedent set forth in Section 3.2 would not be satisfied if
such Revolving Letter of Credit were then issued, amended, renewed or extended
(it being understood and agreed that, in the event any 

 

45

 

Revolving Issuing Bank
shall have received any such notice, it shall have no obligation to issue,
amend, renew or extend any Revolving Letter of Credit until and unless it shall
be satisfied that the events and circumstances described in such notice shall
have been cured or otherwise shall have ceased to exist).

 

(g)           Disbursements.  Each Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit and shall promptly notify the Administrative
Agent and EnergySolutions by telephone (confirmed by hand delivery, facsimile
or other electronic transmission) of such demand for payment and whether such
Issuing Bank has made or will make an L/C Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not relieve
EnergySolutions of its obligation to reimburse such L/C Disbursement.

 

(h)           Reimbursement of Revolving L/C
Disbursements.  If a Revolving
Issuing Bank shall make a Revolving L/C Disbursement in respect of a Revolving
Letter of Credit, EnergySolutions shall reimburse such Revolving L/C
Disbursement by paying to the Administrative Agent an amount in U.S. Dollars
equal to the Dollar Equivalent of such Revolving L/C Disbursement (calculated
using the L/C Exchange Rate as of the applicable L/C Calculation Date) not
later than (i) if EnergySolutions shall have received notice of such
Revolving L/C Disbursement prior to 10:00 a.m., New York City time, on any
Business Day, then 2:00 p.m., New York City time, on such Business Day or (ii) otherwise,
2:00 p.m., New York City time, on the Business Day immediately following
the day that EnergySolutions receives such notice; provided that, in the
case of a Revolving L/C Disbursement denominated in U.S. Dollars, if the amount
of such L/C Disbursement is $1,000,000 or more, EnergySolutions may, subject to
the conditions to borrowing set forth herein, request in accordance with Section 2.3
that such payment be financed with a Base Rate Revolving Borrowing and, to the
extent so financed, EnergySolutions’ obligation to make such payment shall be
discharged and replaced by the resulting Base Rate Revolving Borrowing.  If EnergySolutions fails to reimburse any
Revolving L/C Disbursement by the time specified above, the Administrative
Agent shall notify each Revolving Lender of such failure, the amount of the
payment then due from EnergySolutions in respect of such Revolving L/C
Disbursement and such Revolving Lender’s Pro Rata Share thereof.  Promptly following receipt of such notice,
each Revolving Lender shall pay in U.S. Dollars to the Administrative Agent its
Pro Rata Share of the amount then due from EnergySolutions, in the same manner
as provided in Section 2.4 with respect to Loans made by such Lender (and Section 2.4
shall apply, mutatis  mutandis, to the payment obligations of the
Revolving Lenders pursuant to this paragraph), and the Administrative Agent
shall promptly remit to the applicable Revolving Issuing Bank the amounts so
received by it from the Revolving Lenders. 
Any payment made by a Revolving Lender pursuant to this paragraph (other
than the funding of a Base Rate Revolving Borrowing as contemplated above)
shall not constitute a Loan and shall not relieve EnergySolutions of its
obligation to reimburse such Revolving L/C Disbursement.

 

(i)            Reimbursement of Deposit L/C
Disbursements.  If a Deposit Issuing
Bank shall make a Deposit L/C Disbursement in respect of a Deposit Letter of
Credit, EnergySolutions shall reimburse such Deposit L/C Disbursement by paying
to the Administrative Agent an amount in U.S. Dollars equal to the Dollar
Equivalent of such Deposit L/C Disbursement (calculated using the L/C Exchange
Rate as of the applicable L/C Calculation Date) not later than (i) if 

 

46

 

EnergySolutions shall have
received notice of such Deposit L/C Disbursement prior to 10:00 a.m., New
York City time, on any Business Day, then 2:00 p.m., New York City time,
on such Business Day  or (ii) otherwise,
2:00 p.m., New York City time, on the Business Day immediately following
the day that EnergySolutions receives such notice.  If EnergySolutions shall fail to reimburse
any Deposit L/C Disbursement by the time specified above, the Administrative
Agent shall promptly instruct the Deposit L/C Depositary Bank to withdraw from
the Deposit L/C Escrow Account, and pay to the Administrative Agent for the
account of the applicable Deposit Issuing Bank, an amount equal to the payment
then due from EnergySolutions in respect of such Deposit L/C Disbursement,
whereupon EnergySolutions shall be deemed to have reimbursed such Deposit L/C
Disbursement.

 

(j)            Obligations Absolute.  EnergySolutions’ obligation to reimburse L/C
Disbursements as provided in paragraphs (h) and (i) of this
Section 2.6 is absolute, unconditional and irrevocable and shall be
performed strictly in accordance with the terms of this Agreement under any and
all circumstances whatsoever and irrespective of (i) any lack of validity
or enforceability of any Letter of Credit or this Agreement, or any term or
provision thereof or hereof, (ii) any draft or other document presented
under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect,
(iii) payment by an Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms
of such Letter of Credit or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this paragraph, constitute a legal or equitable discharge of,
or provide a right of setoff against, EnergySolutions’ obligations
hereunder.  None of the Administrative
Agent, the Lenders, the Issuing Banks or any of their Related Parties shall
have any liability or responsibility by reason of or in connection with the
issuance or transfer of any Letter of Credit, any payment or failure to make
any payment thereunder (irrespective of any of the circumstances referred to in
the preceding sentence), any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
other act, failure to act or other event or circumstance; provided that
the foregoing shall not be construed to excuse any Issuing Bank from liability
to EnergySolutions to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by
EnergySolutions to the extent permitted by applicable law) suffered by
EnergySolutions that are caused by such Issuing Bank’s failure to exercise care
when determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. 
The parties hereto expressly agree that, in the absence of gross negligence
or willful misconduct on the part of an Issuing Bank (as determined by a court
of competent jurisdiction in a final and non-appealable judgment), such Issuing
Bank shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented that appear on their face to be in substantial compliance
with the terms of a Letter of Credit, an Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

 

47

 

(k)           Interim Interest.  If an Issuing Bank shall make any L/C
Disbursement, then, unless EnergySolutions shall reimburse such L/C
Disbursement in full on the date such L/C Disbursement is made, the unpaid
amount thereof shall bear interest, for each day from and including the date
such L/C Disbursement is made to but excluding the date that EnergySolutions
reimburses, or is deemed pursuant to the last sentence of paragraph (i) of
this Section 2.6 to have reimbursed, such L/C Disbursement in full at the
rate per annum then applicable to Base Rate Revolving Loans; provided
that, if EnergySolutions fails to reimburse such L/C Disbursement when due
pursuant to paragraph (h) or (i) of this Section 2.6, then Section 2.7(d) shall
apply.  Interest accrued pursuant to this
paragraph (k) shall be paid to the Administrative Agent, for the
account of the applicable Issuing Bank, except that in the case of Revolving
Letters of Credit, interest accrued on and after the date of payment by any
Revolving Lender pursuant to paragraph (h) of this Section 2.6
to reimburse the applicable Revolving Issuing Bank shall be for the account of
such Revolving Lender to the extent of such payment, and shall be payable on
demand or, if no demand has been made, on the date on which EnergySolutions
reimburses the applicable L/C Disbursement in full.

 

(l)            Cash Collateralization of
Revolving Letters of Credit.  If any
Event of Default shall occur and be continuing, on the Business Day that
EnergySolutions receives notice from the Administrative Agent or the Majority
Lenders (or, if the maturity of the Loans has been accelerated, a Majority in
Interest of the Revolving Lenders) demanding the deposit of cash collateral
pursuant to this paragraph, EnergySolutions shall deposit in an account with
the Administrative Agent (the “Revolving L/C Cash Collateral Account”),
in the name of the Administrative Agent and for the benefit of the Secured
Parties, an amount in cash equal to 105% of the Revolving L/C Exposure as of
such date plus any accrued and unpaid interest thereon; provided that
the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to EnergySolutions described in Section 8.1(f) or
8.1(g).  EnergySolutions also shall
deposit cash collateral in accordance with this paragraph as and to the extent
required by Section 2.11(a).  Each
such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of EnergySolutions under this
Agreement.  The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over the Revolving L/C Cash Collateral Account.  Other than any interest earned on the
investment of such deposits solely in Eligible Deposit Account Investments,
which investments shall be made at the request of EnergySolutions and at
EnergySolutions’ risk (including the risk of loss) and expense, such deposits
shall not bear interest.  Interest or
profits, if any, on such investments shall accumulate in the Revolving L/C Cash
Collateral Account.  Moneys in the
Revolving L/C Cash Collateral Account shall be applied by the Administrative
Agent to reimburse the Revolving Issuing Banks for Revolving L/C Disbursements
for which they have not been reimbursed and, to the extent not so applied, shall
be held for the satisfaction of the reimbursement obligations of
EnergySolutions for the Revolving L/C Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of a Majority in
Interest of the Revolving Lenders), be applied to satisfy other obligations of
EnergySolutions under this Agreement.  If
EnergySolutions is required to provide an amount of cash collateral hereunder
as a result of the occurrence of an Event of Default, such amount (to the
extent not applied as aforesaid) shall be returned to EnergySolutions within
three Business Days after all Events of Default have been cured or waived.  If EnergySolutions is required to provide an 

 

48

 

amount of cash collateral
hereunder pursuant to Section 2.11(a), such amount (to the extent not
applied as aforesaid) shall be returned to EnergySolutions as and to the extent
that, after giving effect to such return, (i) the Aggregate Revolving
Exposure would not exceed the Aggregate Revolving Commitment, (ii) the
Revolving L/C Exposure would not exceed the Revolving L/C Specified Amount and (iii) no
Default shall have occurred and be continuing.

 

(m)          Deposit L/C Escrow Account.  EnergySolutions shall cause $310,000,000 of
the proceeds of the Term Loans to be deposited, promptly upon receipt thereof
on the Closing Date, in one or more escrow accounts (each a “Deposit L/C
Escrow Account”) of EnergySolutions with the Administrative Agent and/or
another depositary bank reasonably satisfactory to the Administrative Agent
(each a “Deposit L/C Depositary Bank”). 
At the direction of the Administrative Agent, separate Deposit L/C
Escrow Accounts can be established with a Deposit L/C Depositary Bank to
provide collateral in respect of Deposit L/C Exposure attributable to Deposit
Letters of Credit issued by one or more Deposit Issuing Banks, in which case
each such Deposit L/C Escrow Account will be administered in accordance with
the provisions of this Section 2.6(m) in relation to the Deposit L/C
Specified Amount (as determined by the Administrative Agent) and the Deposit
L/C Exposure associated with such Deposit Issuing Banks and Deposit Letters of
Credit issued thereby.  EnergySolutions
shall grant to the Administrative Agent a fully perfected security interest in
each Deposit L/C Escrow Account, all cash, investments and balances therein and
all proceeds thereof, for the benefit of the Deposit Issuing Banks as
collateral for the payment and performance of the Deposit L/C Secured Obligations,
and separately for the benefit of all other Secured Parties as collateral for
the payment and performance of all other Secured Obligations, in each case with
the priorities set forth in the Guarantee and Collateral Agreement.  Amounts on deposit in a Deposit L/C Escrow
Account shall be held by the relevant Deposit L/C Depositary Bank which shall
enter into a Control Agreement with the Administrative Agent for the benefit of
the Secured Parties.  The Administrative
Agent and the relevant Deposit L/C Depositary Bank shall have exclusive
dominion and control, including the exclusive right of withdrawal, over each
Deposit L/C Escrow Account and no other Person shall be entitled to exercise
any right or power with respect thereto. 
Other than any interest earned on the investment of such deposits solely
in Eligible Deposit Account Investments (or such other investments as may be
reasonably agreed to by EnergySolutions, the Administrative Agent and the
applicable Deposit Issuing Bank), which investments shall be made at the
request of EnergySolutions and at EnergySolutions’ risk (including the risk of
loss) and expense, such deposits shall not bear interest.  Interest or profits, if any, on such
investments shall accumulate in the Deposit L/C Escrow Account.  If an Event of Default shall have occurred
and be continuing, moneys in each Deposit L/C Escrow Account shall be applied
by the Administrative Agent to reimburse the Deposit Issuing Banks for Deposit
L/C Disbursements for which they have not been reimbursed and, to the extent
not so applied, shall be held for the satisfaction of the Deposit L/C Secured
Obligations and the other Secured Obligations in accordance with the Guarantee
and Collateral Agreement.  If at any time
the Deposit L/C Exposure shall exceed the Deposit L/C Escrow Account Balance,
EnergySolutions shall promptly cause additional funds to be deposited in the
Deposit L/C Escrow Accounts in such amounts as shall be necessary to eliminate
such excess.  Except as expressly
provided in the immediately preceding sentence and in Section 2.18,
EnergySolutions shall not have the right to deposit additional funds in the
Deposit L/C Escrow Accounts.  So long as
no Default shall have occurred and be continuing or would result therefrom,
EnergySolutions shall have the right at any time and from time to time, upon at
least three Business Days’ prior written notice to the 

 

49

 

Administrative Agent, to
request the release of (and the Administrative Agent hereby agrees to instruct
each Deposit L/C Depositary Bank to release and pay to EnergySolutions) any
amounts on deposit in the relevant Deposit L/C Escrow Account in excess of the
sum of (i) 101% of the  Deposit L/C
Exposure attributable to Deposit Letters of Credit denominated in U.S. Dollars
and (ii) 105% of the Deposit L/C Exposure attributable to Deposit Letters
of Credit denominated in Available Foreign Currencies, in each case
attributable to such Deposit L/C Escrow Account at such time, other than any
such excess amounts held pursuant to Section 2.11(e) in such Deposit
L/C Escrow Account pending application thereof to the prepayment of Term Loans
as required by such Section, provided that at no time shall the Deposit
L/C Escrow Account Balance in any Deposit L/C Escrow Account be less than the
Deposit L/C Specified Amount attributable to such Deposit L/C Escrow Account at
such time.  It is understood and agreed
that the Deposit L/C Escrow Account Balance required to be maintained in excess
of the Deposit L/C Exposure attributable to a Deposit L/C Escrow Account may
modified from time to time as agreed to by EnergySolutions, the Administrative
Agent and the applicable Deposit Issuing Bank. 
EnergySolutions hereby agrees to, if requested at any time by a Deposit
Issuing Bank, maintain a Deposit L/C Escrow Account Balance equal to such
greater percentage of the Deposit L/C Exposure attributable to a Deposit L/C
Escrow Account as shall be necessary to ensure that the applicable Deposit
Issuing Bank shall be subject only to the capital requirements attributable to
the levels of cash collateralization required hereby on the date hereof.  In addition, the Administrative Agent hereby
agrees to instruct the Deposit L/C Depositary Banks to release and pay to
EnergySolutions any amounts remaining on deposit in the Deposit L/C Escrow
Accounts, after making the prepayments of Term Loans required by
Section 2.11(e), on the later of (i) the date on which the Deposit
L/C Specified Amount is cancelled or permanently reduced to zero and (ii) there
ceases to be any Deposit L/C Exposure.

 

(n)           Designation of Additional Issuing
Banks.  EnergySolutions may, at any
time and from time to time, with the consent of the Administrative Agent (which
consent shall not be unreasonably withheld), designate as additional Revolving
Issuing Banks or Deposit Issuing Bank one or more Revolving Lenders that agree
to serve in such capacity as provided below. 
The acceptance by a Revolving Lender of an appointment as a Revolving
Issuing Bank or a Deposit Issuing Bank hereunder shall be evidenced by an
agreement, which shall be in form and substance reasonably satisfactory to the
Administrative Agent, executed by EnergySolutions, the Administrative Agent and
such designated Revolving Lender and, from and after the effective date of such
agreement, (i) such Revolving Lender shall have all the rights and
obligations of a Revolving Issuing Bank or Deposit Issuing Bank, as applicable,
under this Agreement and (ii) references herein to the term “Revolving Issuing
Bank” or “Deposit Issuing Bank”, as applicable, shall be deemed to include such
Revolving Lender in its capacity as an issuer of Revolving Letters of Credit or
Deposit Letters of Credit hereunder.

 

(o)           Termination of an Issuing Bank.  EnergySolutions may terminate the appointment
of any Issuing Bank as an “Issuing Bank” hereunder by providing a written
notice thereof to such Issuing Bank, with a copy to the Administrative
Agent.  Any such termination shall become
effective upon the earlier of (i) such Issuing Bank acknowledging receipt
of such notice and (ii) the 10th Business Day following the date of the
delivery thereof; provided that no such termination shall become
effective until and unless the L/C Exposure attributable to Letters of Credit
issued by such Issuing Bank (or its Affiliates) shall have been reduced to
zero.  At the time any such termination
shall become effective, EnergySolutions shall pay all unpaid fees

 

50

 

accrued for the account of
the terminated Issuing Bank pursuant to Section 2.9(d) or
2.9(e).  Notwithstanding the
effectiveness of any such termination, the terminated Issuing Bank shall remain
a party hereto and shall continue to have all the rights of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such termination, but shall not issue any additional Letters of Credit.

 

(p)           Issuing Bank Reports to the
Administrative Agent.  Unless
otherwise agreed by the Administrative Agent, each Issuing Bank shall, in
addition to its notification obligations set forth elsewhere in this Section 2.6,
report in writing to the Administrative Agent (i) periodic activity (for
such period or recurrent periods as shall be requested by the Administrative
Agent) in respect of Letters of Credit issued by such Issuing Bank, including
all issuances, extensions, amendments and renewals, all expirations and
cancellations and all disbursements and reimbursements, (ii) reasonably
prior to the time that such Issuing Bank issues, amends, renews or extends any
Letter of Credit, the date of such issuance, amendment, renewal or extension,
and the face amount and currency of the Letters of Credit issued, amended,
renewed or extended by it and outstanding after giving effect to such issuance,
amendment, renewal or extension (and whether the amounts thereof shall have
changed), (iii) on each Business Day on which such Issuing Bank makes any
L/C Disbursement, the date, amount and currency of such L/C Disbursement, (iv) on
any Business Day on which EnergySolutions fails to reimburse an L/C
Disbursement required to be reimbursed to such Issuing Bank on such day, the
date of such failure and the amount and currency of such L/C Disbursement and (v) on
any other Business Day, such other information as the Administrative Agent
shall reasonably request as to the Letters of Credit issued by such Issuing
Bank.

 

(q)           L/C Exposure Determination.  For all purposes of this Agreement, the
amount of a Letter of Credit that, by its terms or the terms of any document
related thereto, provides for one or more automatic increases in the Stated
Amount thereof shall be deemed to be the maximum Stated Amount of such Letter
of Credit after giving effect to all such increases, whether or not such
maximum Stated Amount is in effect at the time of determination.

 

SECTION 2.7  Interest.  (a)  Base Rate Loans.  Interest on each Base Rate Loan shall be
computed on the basis of a year of 360 days or, when the Alternate Base Rate is
based on the Prime Rate, 365 days (or 366 days in a leap year) for the actual
number of days elapsed and shall be accrued at the Alternate Base Rate plus the
Applicable Margin and be due and payable in arrears on each applicable Interest
Payment Date for the period ending on and including the date immediately
preceding such Interest Payment Date. Accrued interest on Base Rate Loans shall
also be due and payable on the Revolving Termination Date and Term Maturity
Date, as applicable.  In the event of any
prepayment or repayment of any Base Rate Loan (other than a Revolving Loan
prior to the Revolving Termination Date), accrued interest on the amount
prepaid or repaid shall be due and payable on the date of such prepayment or
repayment.

 

(b)           Eurodollar Loans.  Interest on each Eurodollar Loan shall be
computed on the basis of a year of 360 days for the actual number of days
elapsed and shall be accrued at the Adjusted Eurodollar Rate plus the
Applicable Margin and be due and payable in arrears on each applicable Interest
Payment Date for the period ending on and including the date immediately
preceding such Interest Payment Date. 
Accrued interest on Eurodollar Loans shall also be due and payable on
the Revolving Termination Date and Term Maturity Date, as applicable.  In the 

 

51

 

event of (i) any
prepayment or repayment of any Eurodollar Loan, accrued interest on the amount
prepaid or repaid shall be due and payable on the date of such prepayment or
repayment and (ii) any conversion of a Eurodollar Loan prior to the end of
the current Interest Period therefor, accrued interest on such Loan shall be
due and payable on the effective date of such conversion.

 

(c)           Alternate Rate of Interest.  If prior to the commencement of any Interest
Period for a Eurodollar Borrowing of any Class:

 

(i)            the Administrative Agent determines
(which determination shall be conclusive absent manifest error) that adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period; or

 

(ii)           the Administrative Agent is advised
by a Majority in Interest of the Lenders of such Class that the Eurodollar
Rate for such Interest Period will not adequately and fairly reflect the cost
to such Lenders of making or maintaining their Loans included in such
Eurodollar Borrowing for such Interest Period;

 

then
the Administrative Agent shall give notice (which may be telephonic) thereof to
EnergySolutions and the Lenders of such Class as promptly as practicable
and, until the Administrative Agent notifies EnergySolutions and the Lenders of
such Class that the circumstances giving rise to such notice no longer
exist, (i) any Interest Election Request that requests the conversion of
any Borrowing of such Class to, or continuation of any Borrowing of such Class as,
a Eurodollar Borrowing shall be ineffective, and such Borrowing shall be
continued as a Base Rate Borrowing, and (ii) any Borrowing Request for a
Eurodollar Borrowing of such Class shall be treated as a request for a Base
Rate Borrowing.

 

(d)           Interest Upon Default.  All overdue principal in respect of the Loans
and all accrued and unpaid overdue interest, premium and other unpaid sums,
shall bear interest, after as well as before judgment, at the Default Rate.  Such interest shall be payable on demand and
shall accrue until the earliest of (i) cure or waiver in accordance with Section 10.10
of all payment Defaults hereunder, (ii) agreement by the Majority Lenders
to rescind the accrual of interest at the Default Rate and (iii) payment
in full of the Obligations.

 

SECTION 2.8  Repayment of Loans; Amortization.  (a)  EnergySolutions hereby
unconditionally promises to pay (i) to the Administrative Agent for the
account of each Term Lender the then unpaid principal amount of each Term Loan
of such Lender on the Term Maturity Date and (ii) to the Administrative
Agent for the account of each Revolving Lender the then unpaid principal amount
of each Revolving Loan of such Lender on the Revolving Maturity Date.

 

(b)           EnergySolutions shall repay Term
Borrowings on the last day of each March, June, September and December,
beginning with the first such date to occur after the Closing Date and ending
with the last such date to occur prior to the Term Maturity Date, in an
aggregate principal amount for each such date equal to 0.25% of the aggregate
principal amount of the Term Borrowings outstanding on the Closing Date (as
such amount may be adjusted pursuant to Section 2.10(b) or 2.11(f)).

 

52

 

SECTION 2.9  Fees. 
(a)  Fees Payable Under the Fee Letter.  EnergySolutions agrees to pay such fees as
are mutually agreed upon and as are described in the Fee Letter.

 

(b)           Commitment Fees.  EnergySolutions shall pay to the
Administrative Agent, for the account of each Revolving Lender, a commitment
fee, payable in arrears quarterly on the last Business Day of each calendar
quarter and on the Revolving Termination Date, computed at the rate of 0.50%
per annum on the daily unused amount of the Revolving Commitment of such Lender
during the period from and including the Closing Date to but excluding the date
on which such Lender’s Revolving Commitment terminates.  For purposes of computing commitment fees
hereunder, the Revolving Commitment of a Revolving Lender shall be deemed to be
used to the extent of the outstanding Revolving Loans and the Revolving L/C
Exposure of such Lender.

 

(c)           Participation Fees.  EnergySolutions shall pay to the
Administrative Agent, for the account of each Revolving Lender, a participation
fee in respect of its participations in Revolving Letters of Credit, payable in
arrears quarterly on the last Business Day of each calendar quarter and on the
Revolving Termination Date and thereafter on demand, computed at the Applicable
Margin for Eurodollar Revolving Loans on the daily amount of such Lender’s
Revolving L/C Exposure (excluding any portion thereof attributable to
unreimbursed Revolving L/C Disbursements) during the period from and including
the Closing Date to but excluding the later of (i) the date on which such
Lender’s Revolving Commitment terminates and (ii) the date on which such
Lender ceases to have any Revolving L/C Exposure.  Participation fees in respect of Revolving
Letters of Credit shall be computed on the basis of a year of 360 days for the
actual number of days elapsed.

 

(d)           Revolving Letters of Credit
Fronting Fees.  EnergySolutions shall
pay to each Revolving Issuing Bank, for its own account, a fronting fee in
respect of each Revolving Letter of Credit issued by it, payable in arrears
quarterly on the last Business Day of each calendar quarter and on the
Revolving Termination Date and thereafter on demand, computed at the rate of
0.25% per annum on the average daily amount of the Revolving L/C Exposure attributable
to Revolving Letters of Credit issued by such Issuing Bank during the period
from and including the Closing Date to but excluding the later of (i) the
Revolving Termination Date and (ii) the date on which there ceases to be
any such Revolving L/C Exposure, and shall also pay to such Revolving Issuing
Bank customary issuance fees, transfer fees and other fees and charges in
connection with the issuance, administration, amendment, payment and
negotiation of Revolving Letters of Credit. 
Fronting fees in respect of Revolving Letters of Credit shall be
computed on the basis of a year of 360 days for the actual number of days
elapsed.

 

(e)           Deposit Letters of Credit Fronting
Fees.  EnergySolutions shall pay to
each Deposit Issuing Bank, for its own account, a fronting fee in respect of
each Deposit Letter of Credit issued by it, payable in arrears quarterly on the
last Business Day of each calendar quarter and on the date on which the Deposit
L/C Specified Amount is cancelled or permanently reduced to zero and thereafter
on demand, computed at the rate of 0.25% per annum on the average daily amount
of the Deposit L/C Exposure attributable to Deposit Letters of Credit issued by
such Issuing Bank during the period from and including the Closing Date to but
excluding the later of (i) the date on which the Deposit L/C Specified
Amount is cancelled or permanently reduced to zero and (ii) the date on
which there ceases to be any such Deposit L/C Exposure, and shall also pay to
the Deposit Issuing Bank customary issuance fees, transfer fees and other fees
and charges 

 

53

 

in connection with the
issuance, administration, amendment, payment and negotiation of Deposit Letter
of Credits.  Fronting fees in respect of
Deposit Letters of Credit shall be computed on the basis of a year of 360 days
for the actual number of days elapsed.

 

(f)            All fees paid pursuant to this
Section 2.9 shall not be refundable under any circumstances.

 

SECTION 2.10  Optional Prepayments.  (a)  Optional Prepayment of
Loans.  Subject to Sections 2.10(b) and
2.13, the principal amount of any Base Rate Loan may be prepaid in full or in
part at any time, upon not less than one Business Day’s prior written notice to
the Administrative Agent of such prepayment. 
Subject to Sections 2.10(b) and 2.13, the principal amount of any
Eurodollar Loan may be prepaid in full or in part at any time upon not less
than three Business Days’ prior written notice to the Administrative Agent of
such prepayment.  Each partial prepayment
of any Borrowing shall be in an amount that would be permitted in the case of
an advance of a Borrowing of the same Type as provided in Section 2.2.  A notice of optional prepayment hereunder
shall be irrevocable; provided that (i) if a notice of prepayment
is given in connection with a conditional notice of termination of the
Revolving Commitments as contemplated by Section 2.19, then such notice of
prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.19 and (ii) a notice of prepayment of Term
Borrowings pursuant to this Section 2.10 may state that such notice is
conditioned upon the occurrence of one or more events specified therein, in
which case such notice may be revoked by EnergySolutions (by notice to the
Administrative Agent on or prior to the specified date of prepayment) if such
condition is not satisfied.

 

(b)           Application of Optional
Prepayments.  Each optional
prepayment of Term Loans hereunder shall be applied (i) first, in
direct order of maturities, to the next four scheduled principal repayment
installments of Term Loans and (ii) second, to the other principal
repayment installments of Term Loans on a pro rata basis.  No optional prepayment of Revolving Loans
hereunder shall reduce the Revolving Commitments.

 

SECTION 2.11  Mandatory Prepayment of Loans.  (a)  Subject to Sections 2.11(f) and
2.13, in the event and on each occasion that (i) the Revolving L/C
Exposure exceeds 105% of the Revolving L/C Specified Amount, EnergySolutions
shall deposit, within two Business Days of receiving notice from the
Administrative Agent thereof, cash collateral in the Revolving L/C Cash
Collateral Account in accordance with Section 2.6(l) and (ii) the
Aggregate Revolving Exposure exceeds the Aggregate Revolving Commitment (except
as a result of Exchange Rate fluctuations not requiring the deposit of cash
collateral pursuant to clause (i) above), EnergySolutions shall
immediately prepay Revolving Borrowings (or, if no such Borrowings are
outstanding, deposit cash collateral in the Revolving L/C Cash Collateral
Account in accordance with Section 2.6(l)), in each case in such amounts
and such currencies as shall be necessary to eliminate such excess.

 

(b)           Subject to Sections 2.11(f) and
2.13, in addition to the scheduled repayments provided for in
Section 2.8(b), EnergySolutions shall prepay Term Loans in an aggregate
amount equal to 100% of the Net Proceeds (i) from any Permitted Asset
Sales (other than any Excluded Asset Sales) and (ii) received as a result
of any casualty or condemnation. 
Notwithstanding the foregoing, with respect to any Net Proceeds received
or realized in respect of any Permitted 

 

54

 

Asset Sales (other than
any Excluded Asset Sales) or any insured casualty events, so long as no Default
or Event of Default shall have occurred and be continuing, EnergySolutions may
reinvest all or any portion of such Net Proceeds (but, in the case of Net
Proceeds received or realized in respect of an insured casualty event, not in
excess of $10,000,000 per any such event) in assets used or useful in its
business within 365 days following receipt of such Net Proceeds (or, if longer,
within a period of 180 days after entry by EnergySolutions or one or more of
its Subsidiaries during such 365-day period into a written agreement with a
third party to acquire such assets with such Net Proceeds), at which time a
prepayment shall be required in an amount equal to the Net Proceeds that have
not been so applied; provided, however, that (A) if the
property subject to such asset sale or casualty event constituted Collateral
under the Security Documents, then any capital assets purchased with the Net
Proceeds thereof pursuant to this paragraph shall be mortgaged or pledged, as the
case may be, to the Administrative Agent for the benefit of the Secured Parties
and (B) if any Net Proceeds are no longer intended to be so reinvested in
assets in accordance with the provisions of this paragraph at any time after
delivery of a notice of reinvestment election, an amount equal to any such Net
Proceeds shall be immediately applied to the prepayment of the Term Loans in
accordance herewith.

 

(c)           Subject to Sections 2.11(f) and
2.13, in addition to the scheduled repayments provided for in Section 2.8(b),
EnergySolutions shall prepay Term Loans in an aggregate amount equal to 100% of
the Net Proceeds received after the Closing Date from any Indebtedness for
Money Borrowed incurred by Parent, EnergySolutions or any of their respective
Subsidiaries, except for Indebtedness for Money Borrowed permitted by
Section 7.1 (other than Section 7.1(u)), on the third Business Day
following receipt thereof.

 

(d)           Subject to Sections 2.11(f) and
2.13, in addition to the scheduled repayments provided for in Section 2.8(b),
for each fiscal year during the term hereof (commencing with the fiscal year
ending on December 31, 2011), on or prior to the fifth Business Day
following delivery of the financial statements required by Section 6.2
(and in any event no later than the last day on which such financial statements
may be delivered in compliance with such Section), EnergySolutions shall prepay
Term Loans, in an aggregate amount equal to (i) 50%, if the Leverage Ratio
as of the end of such fiscal year is equal to or greater than 3.0:1.0, or (ii) 25%,
if the Leverage Ratio as of the end of such fiscal year is less than 3.0:1.0
but greater than 1.0:1.0, in each case of the excess of (A) Excess Cash
Flow for such fiscal year over (B) the aggregate amount of optional prepayments
of Term Loans made on or prior to such date during the then current fiscal or
during the immediately preceding fiscal year after the Excess Cash Flow
prepayment date therein (other than any optional prepayments financed with
Excluded Sources).  If the Leverage Ratio
as of the end of such fiscal year is equal to or less than 1.0:1.0,
EnergySolutions shall not be required to prepay Term Loans in accordance with
this Section 2.11(d).

 

(e)           Subject to Section 2.11(f) and
2.13, in the event and on each occasion that the Deposit L/C Specified Amount
is reduced in accordance with Section 2.19(c), EnergySolutions agrees that
the Administrative Agent shall cause an amount equal to the amount of such
reduction to be withdrawn from the Deposit L/C Escrow Account and applied to
the prepayment of Term Loans, unless a Default has occurred and is continuing
or would result therefrom, in which case funds on deposit in the Deposit L/C
Escrow Account shall be applied in accordance with the Guarantee and Collateral
Agreement until such time as all Defaults shall have been 

 

55

 

cured or waived and only
then, to the extent any such funds remain available, to the prepayment of the
Term Loans in accordance with this Section.

 

(f)            Each mandatory prepayment of Term
Loans pursuant to this Section 2.11 shall be applied (i) first,
in direct order of maturities, to the next four scheduled principal repayment
installments of Term Loans and (ii) second, to the other principal
repayment installments of Term Loans on a pro rata basis.  No mandatory prepayment of Revolving Loans
pursuant to this Section 2.11 shall reduce the Revolving Commitments.

 

SECTION 2.12  Evidence of Debt; Notes.  (a)  The Loans shall be repayable
in accordance with the terms and provisions set forth herein.  Upon the request of any Lender, Notes shall
be issued by EnergySolutions and payable to the order of such Lender reflecting
such Lender’s Commitment or Loans, as applicable.  The Notes issued by EnergySolutions to the
Lenders shall be duly executed and delivered by one or more Authorized
Signatories.

 

(b)           Each Lender shall
maintain in accordance with its usual practice an account or accounts
evidencing the Indebtedness of EnergySolutions owing to such Lender resulting
from each Loan owing to such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.

 

(c)           The Register
maintained by the Administrative Agent pursuant to Section 10.4 shall
include records of (i) the date and amount of each Loan made hereunder,
the Type of such Loan and, if appropriate, the Interest Period applicable
thereto, (ii) the terms of each Assignment and Assumption delivered to and
accepted by it, (iii) the amount of any principal or interest due and
payable or to become due and payable from EnergySolutions to each Lender
hereunder and (iv) the amount of any sum received by the Administrative
Agent from EnergySolutions hereunder and each Lender’s share thereof.

 

(d)           Entries made in good faith by the Administrative Agent in the Register
pursuant to Section 10.4 and by each Lender in its account or accounts
pursuant to paragraph (b) of this Section 2.12 shall be prima facie
evidence of the amount of principal and interest due and payable or to become
due and payable from EnergySolutions to, in the case of the Register, each
Lender and, in the case of such account or accounts, such Lender, under this
Agreement, absent manifest error; provided, however, that the
failure of the Administrative Agent or any Lender to make an entry, or any
finding that an entry is incorrect, in the Register or such account or accounts
shall not limit or otherwise affect the obligations of EnergySolutions under
this Agreement.

 

SECTION 2.13  Payments Generally; Term Loan Call
Protection.  (a)  Each
payment (including any prepayment) by EnergySolutions on account of the
principal of or interest on the Loans, any fees and any other amounts owing to
the Lender Parties, the Administrative Agent or any of them under this
Agreement shall be made not later than 1:00 p.m., New York City time, on
the date specified for payment under this Agreement to the Administrative
Agent, at the account of the Administrative Agent most recently designated by
it for such purpose by notice to EnergySolutions, for the account of the Lender
Parties or the Administrative Agent, as the case may be in lawful money of the
United States, in immediately available funds without setoff or counterclaim.  Any payment received by the Administrative
Agent after 1:00 p.m. (New York 

 

56

 

City time) shall be
deemed received on the next Business Day. 
Receipt by the Administrative Agent of any payment hereunder at or prior
to 1:00 p.m., New York City time, on any Business Day shall be deemed to
constitute receipt on such Business Day. 
In the case of a payment for the account of a Lender Party, the
Administrative Agent will promptly thereafter distribute the amount so received
in like funds to such Lender Party.  If
the Administrative Agent shall not have received any payment from
EnergySolutions as and when due, the Administrative Agent will promptly notify
the Lender Parties accordingly.  Only
upon its acceptance of an Assignment and Assumption and recording of the
information contained therein in the Register pursuant to Section 10.4,
from and after the effective date of such Assignment and Assumption, the
Administrative Agent shall make all payments hereunder in respect of the interest
assigned thereby to the Lender Party assignee thereunder, and the parties to
such Assignment and Assumption shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.

 

(b)           EnergySolutions agrees to pay
principal, interest, fees and all other Obligations due hereunder, under the
Fee Letter and under the other Loan Documents without setoff or counterclaim or
any deduction whatsoever (other than any deductions or withholdings required by
law on account of Taxes).

 

(c)           In the event that, prior to the first
anniversary of the Closing Date, any Lender receives a Refinancing Prepayment
(as defined below), then, at the time thereof, EnergySolutions shall pay to
such Lender a prepayment premium equal to 1% of the amount of such Refinancing
Prepayment.  As used herein, with respect
to any Lender, a “Refinancing Prepayment” is the amount of principal of
the Term Loans of such Lender that is either (a) prepaid by
EnergySolutions pursuant to Section 2.10 or Section 2.11(c) substantially
concurrently with the incurrence by Parent, EnergySolutions or any of their
respective Subsidiaries of new loans or other Indebtedness (other than
Capitalized Lease Obligations) (whether pursuant to Incremental Commitments or
otherwise) or (b) received by such Lender as a result of the mandatory
assignment of such Term Loans under the circumstances described in Section 2.20(b) following
the failure of such Lender to consent to an amendment of this Agreement that
would have the effect of reducing the Applicable Margin with respect to such
Term Loans.  Except as expressly set
forth in this Section 2.13(c), all repayments and prepayments of Loans
hereunder shall be without premium or penalty, but shall be subject to Section 2.14.

 

(d)           Subject to any contrary provisions in
the definition of the term “Interest Period”, if any payment under this
Agreement or any of the other Loan Documents is specified to be made on a day
which is not a Business Day, it shall be made on the next Business Day, and
such extension of time shall in such case be included in computing interest and
fees, if any, in connection with such payment; provided, however,
that, if such extension would cause payment of interest on or principal of
Eurodollar Loans to be made in the next following calendar month, such payment
shall be made on the next preceding Business Day.

 

(e)           Unless the Administrative Agent shall
have received notice from EnergySolutions prior to the date on which any
payment is due to any Lender Party hereunder that EnergySolutions will not make
such payment in full, the Administrative Agent may assume that EnergySolutions
has made such payment in full to the Administrative Agent on such date and the 

 

57

 

Administrative Agent may,
in reliance upon such assumption, cause to be distributed to each such Lender
Party on such due date an amount equal to the amount then due to such Lender
Party.  If and to the extent EnergySolutions
shall not have so made such payment in full to the Administrative Agent, each
such Lender Party shall repay to the Administrative Agent forthwith on demand
such amount distributed to such Lender Party together with interest thereon,
for each day from the date such amount is distributed to such Lender Party
until the date such Lender Party repays such amount to the Administrative
Agent, at the Federal Funds Rate.

 

SECTION 2.14  Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto (including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert or continue
any Eurodollar Loan on the date specified in any notice delivered pursuant
hereto or (d) the assignment of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by
EnergySolutions pursuant to Section 2.20, then, in any such event,
EnergySolutions shall compensate each Lender for the loss, cost and expense
attributable to such event.  Such loss,
cost or expense to any Lender shall be deemed to include an amount determined
by such Lender to be the excess, if any, of (i) the amount of interest
that would have accrued on the principal amount of such Loan had such event not
occurred, at the Eurodollar Rate that would have been applicable to such Loan
(but not including the Applicable Margin applicable thereto), for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest that would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for U.S. Dollar deposits of a comparable amount
and period from other banks in the London interbank market.  A certificate of any Lender delivered to
EnergySolutions and setting forth any amount or amounts that such Lender is
entitled to receive pursuant to this Section 2.14 shall be conclusive
absent manifest error.  EnergySolutions
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.

 

SECTION 2.15  Payments; Pro Rata Treatment; Sharing of
Setoffs.  (a)Pro Rata Treatment.  Except as specifically provided in Section 2.21
or elsewhere in this Agreement or in Section 5.02 of the Guarantee and
Collateral Agreement, if at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed L/C Disbursements, interest and fees then due hereunder, such
funds shall be applied towards payment of the amounts then due hereunder
ratably among the parties entitled thereto, in accordance with the amounts then
due to such parties.

 

(b)           Sharing of Setoffs.  If any Lender shall, by exercising any right
of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Loans or participations in Revolving L/C
Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in Revolving
L/C Disbursements and accrued interest thereon than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Loans and
participations in Revolving L/C Disbursements of other Lenders to the extent
necessary so that the amount of all such payments shall be shared by the 

 

58

 

Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their Loans and participations in Revolving L/C Disbursements; provided
that (i) if any such participations are purchased and all or any portion
of the payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall not be
construed to apply to (A) any payment made by EnergySolutions pursuant to
and in accordance with the express terms of this Agreement or (B) any
payment obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Loans or participations in Revolving L/C
Disbursements to any assignee or Participant, other than to Parent,
EnergySolutions, any of their respective Subsidiaries or other Affiliates (as
to which the provisions of this paragraph shall apply).  EnergySolutions consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against EnergySolutions rights of setoff and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of
EnergySolutions in the amount of such participation.

 

(c)           If any Lender shall fail to make any
payment required to be made by it hereunder to or for the account of the
Administrative Agent or any Revolving Issuing Bank, then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof)
(i) apply any amounts thereafter received by the Administrative Agent for
the account of such Lender to satisfy such Lender’s obligations in respect of
such payment until all such unsatisfied obligations have been discharged or (ii) hold
any such amounts in a segregated account as cash collateral for, and
application to, any future funding obligations of such Lender hereunder, in
each case in such order as shall be determined by the Administrative Agent in
its discretion.

 

SECTION 2.16  Increased Costs.  (a)  If any Change in Law shall:

 

(i)            impose, modify or deem applicable
any reserve, special deposit, compulsory loan, insurance charge or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender or Issuing Bank (except any such reserve requirement
reflected in the Adjusted Eurodollar Rate);

 

(ii)           impose on any Lender or Issuing Bank
or the London interbank market any other condition, cost or expense affecting
this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit
or participation therein; or

 

(iii)          subject any Recipient to any Taxes
(other than Covered Taxes and taxes excluded from Covered Taxes under Section 2.17(a),
including value-added or similar Taxes) on its loans, letters of credit,
commitments or other obligations or its deposits, reserves, other liabilities
or capital attributable thereto;

 

and the result of any of the foregoing shall be to
increase the cost to such Lender or such other Recipient of making or
maintaining any Loan (or of maintaining its obligation to make any such Loan)
or to increase the cost to such Lender, such Issuing Bank or such other
Recipient of participating in, issuing or maintaining any Letter of Credit (or
of maintaining its obligation to participate in or issue any Letter of Credit)
or to reduce the amount of any sum received or receivable by such Lender, such
Issuing Bank or such other Recipient hereunder (whether of 

 

59

 

principal, interest or otherwise), then, from time
to time upon request of such Lender, such Issuing Bank or such other Recipient,
EnergySolutions will pay to such Lender or Issuing Bank, as the case may be,
such additional amount or amounts as will compensate such Lender or Issuing
Bank, as the case may be, for such additional costs or expenses incurred or
reduction suffered.

 

(b)           If any Lender or Issuing Bank
determines that any Change in Law regarding capital requirements has had or
would have the effect of reducing the rate of return on such Lender’s or
Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s
holding company, if any, as a consequence of this Agreement, the Commitments of
or the Loans made by, or participations in Letters of Credit held by, such
Lender, or the Letters of Credit issued by such Issuing Bank, to a level below
that which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s
holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s or Issuing Bank’s policies and the policies of such
Lender’s or Issuing Bank’s holding company with respect to capital adequacy),
then, from time to time upon request of such Lender or Issuing Bank,
EnergySolutions will pay to such Lender or Issuing Bank, as the case may be,
such additional amount or amounts as will compensate such Lender or Issuing
Bank or such Lender’s or Issuing Bank’s holding company for any such reduction
suffered.

 

(c)           A certificate of a Lender or Issuing
Bank setting forth the amount or amounts necessary to compensate such Lender or
Issuing Bank or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section delivered to
EnergySolutions shall be conclusive absent manifest error.  EnergySolutions shall pay such Lender or
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 Business Days after receipt thereof.

 

(d)           Failure or delay on the part of any
Lender or Issuing Bank to demand compensation pursuant to this
Section 2.16 shall not constitute a waiver of such Lender’s or Issuing
Bank’s right to demand such compensation; provided that EnergySolutions
shall not be required to compensate a Lender or Issuing Bank pursuant to this
Section for any increased costs or expenses incurred or reductions
suffered more than 180 days prior to the date that such Lender or Issuing Bank,
as the case may be, notifies EnergySolutions of the Change in Law giving rise
to such increased costs or expenses or reductions and of such Lender’s or
Issuing Bank’s intention to claim compensation therefor; provided  further
that, if the Change in Law giving rise to such increased costs or expenses or
reductions is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.

 

SECTION 2.17  Taxes. 
(a)  Subject to the exclusions and limitations of this
Section 2.17 and subject to the Lenders’ compliance with
Section 2.17(f), any and all payments by any Loan Party hereunder or under
the other Loan Documents shall be made free and clear of and without deduction
or withholding for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings (including any interest, additions to tax or penalties
applicable thereto) (“Taxes”) imposed or assessed on or with respect to
payments made under this Agreement or the other Loan Documents by the United
States of America or any political subdivisions thereof or therein or any other
jurisdiction (including non-U.S. jurisdictions), and all liabilities with
respect hereto or thereto (but excluding (i) any tax imposed on or
measured by the income or profits of a

 

60

 

 

 

Lender or franchise taxes
imposed in lieu of net income taxes on overall gross receipts, or any other
similar taxes imposed, in each case, as a result of such Lender being organized
in, having its principal office or applicable lending office in, engaging in a
trade or business in, or having a present or former connection with the
jurisdiction imposing such Tax (other than any such trade or business, or
connection arising or deemed to arise solely or primarily from any transactions
contemplated by this Agreement), (ii) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
EnergySolutions is located, and (iii) any withholding tax that is (A) required
to be imposed on amounts payable to a Recipient pursuant to any law in force at
the time (including FATCA, and in the case of FATCA, including any regulations
or official interpretations thereof issued after such time) such Lender becomes
a party thereto (or designates a new lending office) or (B) attributable
to a Recipient’s failure or inability (other than as a result of Change in Law)
to comply with Section 2.17(f), except to the extent that such Recipient
(or its assignor, if any) was entitled, at the time of designation of a new
lending office (or assignment), to receive additional amounts from
EnergySolutions with respect to such withholding tax pursuant to Section 2.17(a) (all
such non-excluded taxes, levies, imposts, duties, fees, assessments or other
charges being referred to collectively as “Covered Taxes”).  If any Loan Party or the Administrative Agent
shall be required by law to withhold or deduct any Covered Taxes from or in
respect of any sum payable hereunder or under any other Loan Document to any
Lender, (i) the sum payable by the Loan Party shall be increased as may be
necessary so that after making all required deductions or withholdings on
account of Covered Taxes (including deductions applicable to additional sums
payable under this Section 2.17) such Lender receives an amount equal to
the sum it would have received had no such deductions or withholdings of
Covered Taxes been made, (ii) the applicable Loan Party or the
Administrative Agent, as the case may be, shall make such deductions or
withholdings, and (iii) the applicable Loan Party or the Administrative
Agent, as the case may be, shall pay the full amount of Covered Taxes deducted
to the relevant taxation authority or other authority in accordance with
Applicable Law.

 

(b)           EnergySolutions agrees to pay any
present or future recordation, transfer, mortgage, stamp or documentary taxes
or any other excise or property taxes, charges or similar levies (including any
interest and penalties related thereto) imposed by the United States of America
or any political subdivision thereof or any other jurisdiction (including
non-U.S. jurisdictions) that arise from the execution, delivery, registration
of, performance under, or enforcement of, this Agreement or any other Loan
Document (hereinafter referred to as “Other Taxes”).

 

(c)           Without duplication of its obligation
to pay increased amounts on account of Covered Taxes and Other Taxes pursuant
to Sections 2.17(a) and 2.17(b), respectively, EnergySolutions shall
indemnify each Recipient for the full amount of Covered Taxes and Other Taxes
(including any Covered Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.17) paid by such Recipient and any
expenses arising therefrom or with respect thereto, whether or not such Covered
Taxes or Other Taxes were correctly or legally asserted.  Payment by EnergySolutions pursuant to this
indemnification shall be made within 30 days from the date such Recipient makes
written demand therefor (submitted through the Administrative Agent).  A Recipient’s failure to provide notice to
EnergySolutions shall not relieve EnergySolutions of any of its obligations
under this Section 2.17(c). 
Notwithstanding the foregoing, where notice is not given within one
hundred twenty (120) days after a Recipient has 

 

61

 

actual notice of the
assertion of taxes and EnergySolutions does not otherwise have notice of such
assertion, no indemnification shall be required for penalties, additions to
tax, expenses, and interest accruing on such Covered Taxes or Other Taxes from
the date one hundred twenty (120) days after such has actual notice of the
assertion of such taxes until the date such notice was actually received by
EnergySolutions.

 

(d)           As soon as practicable (but in any
event within 30 days) after the date of any payment of Covered Taxes or Other
Taxes by any Loan Party, such Loan Party shall furnish to the Administrative
Agent, at its address referred to in Section 10.1, the original or a
certified copy of a receipt evidencing payment thereof or other evidence
reasonably satisfactory to the Administrative Agent.  The applicable Loan Party shall compensate
each Recipient to the extent that such Recipient is required to pay any Covered
Taxes or Other Taxes (or applicable penalties, interest and expenses) as a
result of any failure by such Loan Party to so furnish such copy of such
receipt.

 

(e)           The agreements and obligations of the
Loan Parties contained in this Section 2.17 shall survive the indefeasible
payment in full of the Obligations.

 

(f)            Notwithstanding any provision to the
contrary in this Agreement, to the extent that such Person is at such time
legally entitled to do so, on the date a Person becomes a Lender hereunder and
at such other times as reasonably requested by EnergySolutions or the
Administrative Agent in writing, such Person must provide to EnergySolutions
and the Administrative Agent two properly completed and duly executed originals
of each of the following, as applicable: 
(i) Form W-8ECI (in the case of a non-U.S. Person claiming
exemption from withholding because the income is effectively connected with a
U.S. trade or business), (ii) Form W-8BEN (in the case of a non-U.S.
Person claiming exemption from, or reduction of, withholding tax under an
income tax treaty or under the portfolio interest exemption), (iii) with
respect to any interest in this Agreement in which a participation has been
sold, a Form W-8IMY along with accompanying Form W-8BEN (claiming
exemption from withholding under the portfolio interest exemption), (iv) any
other applicable form, certificate or document necessary to establish such
non-U.S. Person’s entitlement to exemption from United States Federal
withholding tax or reduced rate with respect to all payments to be made to such
non-U.S. Person under this Agreement (including in the case of a Lender
claiming the benefits of the exemption for portfolio interest, (x) a
certificate to the effect that such foreign Lender is not (A) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (B) a “10
percent shareholder” of EnergySolutions within the meaning of section 881(c)(3)(B) of
the Code, or (C) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code), or (v) Form W-9 (claiming exemption
from backup withholding tax), or any successor forms.  Each Lender agrees that from time to time
after the Closing Date, when a lapse in time or change in circumstances renders
the previous certification obsolete or inaccurate in any material respect, such
Lender will, to the extent that such Lender is at such time legally entitled to
do so, deliver to EnergySolutions and the Administrative Agent two new accurate
and complete original signed copies of the applicable certification form.  If a payment made to a Lender under this
Agreement would be subject to U.S. Federal withholding Tax imposed by FATCA if
such Lender were to fail to comply with the applicable reporting requirements
of FATCA (including those contained in Section 1471(b) or 1472(b) of
the Code, as applicable), such Lender shall deliver to the Withholding Agent,
at the time or times prescribed by law and at such time or times reasonably
requested by the 

 

62

 

Withholding Agent, such
documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of
the Code) and such additional documentation reasonably requested by the
Withholding Agent as may be necessary for the Withholding Agent to comply with
its obligations under FATCA, to determine that such Lender has complied with
such Lender’s obligations under FATCA or to determine the amount to deduct and
withhold from such payment. For purposes of this Section 2.17(f), FATCA
shall include any regulations or official interpretations thereof.

 

(g)           If a Recipient determines, in its
good faith sole discretion, that it has received a refund of any Covered Taxes
or Other Taxes as to which it has been indemnified by a Loan Party or with
respect to which the Loan Party has paid additional amounts pursuant to this Section 2.17,
it shall pay over such refund to such Loan Party (but only to the extent of
indemnity payments made, or additional amounts paid, by such Loan Party under
this Section 2.17 with respect to the Covered Taxes or Other Taxes giving
rise to such refund), net of all out-of-pocket expenses of such Recipient and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided that the Loan Party,
upon the request of such Recipient, agrees to repay to such Recipient the
amount paid over to such Loan Party (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority with respect to such
refund) in the event such Recipient is required to repay such refund to such Governmental
Authority.  This paragraph shall not be
construed to require any Recipient to make available its tax returns (or any
other information relating to its Taxes which it deems confidential) to the
Loan Party or any other Person. 
Notwithstanding anything to the contrary, in no event will any Recipient
be required to pay any amount to a Loan Party the payment of which would place
such Recipient in a less favorable net after-tax position than such Recipient
would have been in if the additional amounts giving rise to such refund of any
Covered Taxes or Other Taxes had never been paid.

 

(h)           Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.16, 2.17(a) or
2.17(c) with respect to such Lender, it will, if requested by
EnergySolutions, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any
Loans affected by such event with the object of avoiding the consequences of
such event; provided that such designation is made on terms that, in the
good faith sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided
further that nothing in this Section 2.17 shall affect or postpone
any of the obligations of any Loan Party or the rights of any Lender pursuant
to Section 2.16, 2.17(a) or 2.17(c).

 

(i)            Each Lender Party shall severally
indemnify the Administrative Agent for any Taxes (but in the case of Covered
Taxes, only to the extent that EnergySolutions has not already indemnified the
Administrative Agent for any such Covered Taxes and without limiting the
obligation of EnergySolutions to do so), in each case attributable to such
Lender Party that are paid or payable by the Administrative Agent in connection
with this Agreement or any other Loan Documents and any reasonable expenses
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  The indemnity under this Section 2.17(i) shall
be paid within 10 days after the Administrative Agent delivers to the
applicable Lender Party a certificate stating the amount of 

 

63

 

Taxes so paid or payable
by the Administrative Agent.  Such
certificate shall be conclusive of the amount so paid or payable absent
manifest error.

 

SECTION 2.18 
Increase in Commitments.  (a) 
Borrower Request.  EnergySolutions
may by written notice to the Administrative Agent (whereupon the Administrative
Agent shall promptly deliver a copy to each of the Lenders) request, from time
to time prior to the Term Maturity Date or the Revolving Maturity Date, as
applicable, (i) the extension of one or more new Term Commitments (any
such new Term Commitment being referred to herein as an “Incremental Term
Commitment”) or (ii) one or more increases in the existing Revolving
Commitments or extensions of new Revolving Commitments (any such increase in or
extension of Revolving Commitments being referred to herein as an “Incremental
Revolving Commitment”), in each case in an aggregate amount not to exceed
the Incremental Commitments Cap.  Each
Incremental Commitment shall be (A) an integral multiple of $5,000,000 and
not less than $25,000,000 or (B) if the Incremental Commitment Cap at such
time shall be less than $25,000,000, shall be equal thereto.  EnergySolutions may elect in the notice
delivered pursuant to this Section 2.18(a) (such election being
referred to herein as the “Deposit L/C Increase Election”) that the
proceeds of the Term Loans made pursuant to an Incremental Term Commitment
(such Term Loans being referred to herein as “Incremental Term Loans”),
be deposited in the Deposit L/C Escrow Account as collateral for the payment
and performance of EnergySolutions’ reimbursement obligations to the Deposit
Issuing Banks in respect of Deposit Letters of Credit and that the Deposit L/C
Specified Amount be increased by an amount equal to the amount of such
deposit.  Each notice delivered pursuant
to this Section 2.18(a) shall specify (x) the date (the “Increase
Effective Date”) on which EnergySolutions proposes that the increased or
new Commitments shall be effective, which shall be a date not less than 10
Business Days after the date on which such notice is delivered to the
Administrative Agent and (y) the identity of the financial institutions to
whom EnergySolutions proposes that any portion of such increased or new
Commitments be allocated and the amounts of such allocations; provided
that any existing Lender approached to provide all or a portion of the
increased or new Commitments may elect or decline, in its sole discretion, to
provide such increased or new Commitment.

 

(b)           Conditions.  An Incremental Commitment shall become
effective, as of the Increase Effective Date specified therefor; provided
that:

 

(i)            each of the conditions set forth in
Section 3.2 shall be satisfied;

 

(ii)           no Default or Event of Default shall
have occurred and be continuing or would result therefrom or from the
borrowings to be made on such Increase Effective Date and the use of proceeds
thereof;

 

(iii)          the Secured Leverage Ratio, calculated
after giving pro forma effect to the establishment of such Incremental
Commitment, the incurrence of Indebtedness thereunder (assuming, in the case of
an Incremental Revolving Commitment, that such Commitment is fully used and, in
the case of a Term Commitment, that the entire principal amount of Term Loans
made thereunder constitutes Indebtedness for Money Borrowed) and any
substantially concurrent use of the proceeds thereof, shall not exceed (A) if
such Incremental Commitment is established prior to the first anniversary of
the 

 

64

 

Closing Date,
1.50:1.00 or (B) if such Incremental Commitment is established at any time
thereafter, 1.75:1.00;

 

(iv)          EnergySolutions shall deliver or cause
to be delivered any legal opinions or other documents reasonably requested by
the Administrative Agent in connection with such Incremental Commitment; and

 

(v)           the Administrative Agent shall have
consented to any Lender’s providing such Incremental Commitments if such
consent would be required under Section 10.4 for an assignment of Loans or
Commitments, as applicable, to such Lender.

 

(c)           Terms of New Loans and Commitments.  The terms and conditions of Loans made
pursuant to any Incremental Commitment shall be as follows:

 

(i)            the terms and conditions of the
Incremental Loans shall be, except as otherwise set forth herein, identical to
the terms and conditions of the existing Loans and may be part of the same Class of
Loans and Borrowings;

 

(ii)           any Incremental Term Loans shall not
amortize (on a percentage basis) at a greater rate than the existing Term Loans
and shall not mature prior to the Term Maturity Date;

 

(iii)          in the event that the initial yield on
any Incremental Loans (in each case taking into account any applicable interest
rate “floor”, as well as any original issue discount or upfront fees (other
than arrangement fees to the extent not shared with the Lenders providing such
Incremental Loans), which shall be equated to such interest margin assuming a
four-year average life and without any present value discount) exceeds (the
amount of such excess being referred to herein as the “Yield Differential”)
by more than 25 basis points the Applicable Margin then in effect for
Eurodollar Term Loans or Eurodollar Revolving Loans, as applicable, then the
Applicable Margin then in effect for such Loans shall automatically be increased
by the amount of the Yield Differential over 25 basis points, effective on the
Increase Effective Date; provided that any Yield Differential in respect
of the Revolving Loans, after giving effect to the foregoing increase in the
Applicable Margin, shall be permitted only to the extent it results from the
payment of upfront fees in respect of the Incremental Revolving Commitments (it
being understood that the Applicable Margin for all Revolving Loans of the same
Type shall at all times be the same);

 

(iv)          participation in the Incremental
Commitments shall be offered to banks, financial institutions and other
entities that would be Eligible Assignees reasonably acceptable to
EnergySolutions and the Administrative Agent.

 

(d)           Adjustment of Revolving Loans.  In the case of Incremental Revolving
Commitments, each of the Revolving Lenders having a Revolving Commitment prior
to the Increase Effective Date (the “Pre-Increase Revolving Lenders”)
will automatically and without any further action by any party be deemed to
have assigned to the Revolving Lenders which are acquiring Incremental
Revolving Commitments on the Increase Effective Date (the “Post-Increase
Revolving Lenders”), and the Post-Increase Revolving Lenders will
automatically and 

 

65

 

without any further action
by any party be deemed to have assumed and purchased from the Pre-Increase
Revolving Lenders, such participation interests in the Revolving Loans and
Revolving L/C Exposure outstanding on such Increase Effective Date as shall be
necessary in order that, after giving effect to all such deemed assignments and
assumptions, the Revolving Loans and Revolving L/C Exposure shall be held by
the Pre-Increase Revolving Lenders and Post-Increase Revolving Lenders ratably
in accordance with their Pro Rata Shares after giving effect to the Incremental
Revolving Commitments.  The deemed
assignments of Eurodollar Revolving Loans made pursuant to this paragraph (d) shall
be subject to compensation by EnergySolutions pursuant to the provisions of
Section 2.14 if the Increase Effective Date occurs other than on the last
day of the Interest Period relating thereto.

 

(e)           Making of New Term Loans.  On any Increase Effective Date on which
Incremental Term Commitments become effective, subject to the satisfaction of
the foregoing terms and conditions, each Lender providing an Incremental Term
Commitment shall make an Incremental Term Loan to EnergySolutions in an amount
equal to its Incremental Term Commitment. 
EnergySolutions shall cause the proceeds of any Incremental Term Loans,
in respect of which it shall have made a Deposit L/C Increase Election in the
notice delivered to the Administrative Agent pursuant to paragraph (a) of
this Section 2.18, to be deposited in the Deposit L/C Escrow Account as
collateral for the payment and performance of its reimbursement obligations to
the Deposit Issuing Banks in respect of Deposit Letters of Credit, in the
manner set forth in and subject to the provisions of Section 2.6(m),
whereupon the Deposit L/C Specified Amount shall be automatically increased by
an amount equal to the amount of such deposit.

 

(f)            Equal and Ratable Benefit.  The Loans and Commitments established
pursuant to this Section 2.18 shall constitute Loans and Commitments
under, and shall be entitled to all the benefits afforded by, this Agreement
and the other Loan Documents, and shall, without limiting the foregoing,
benefit equally and ratably in right of payment from the Guarantees and
Security Interests created by the Security Documents.  The Loan Parties shall take any actions
reasonably required by the Administrative Agent to ensure and/or demonstrate
that the Security Interests granted by the Security Documents continue to be
perfected under the UCC or otherwise after giving effect to the establishment
of any such Loans or Commitments.

 

(g)           Amendment to Loan Documents.  EnergySolutions and the Administrative Agent
may, without the consent of any other Lender, enter into an amendment to any
Loan Document (an “Incremental Facility Amendment”) to appropriately
include any credit commitments or extensions contemplated by this
Section 2.18, including to provide that any Incremental Loans shall share
in the optional and mandatory prepayments and commitment reductions on the same
basis as the then outstanding Loans. 
Each Incremental Lender, if not already a Lender hereunder, shall become
a party to this Agreement by completing and delivering to the Administrative
Agent a duly executed accession agreement in a form satisfactory to the
Administrative Agent and EnergySolutions (an “Accession Agreement”), and
on the Increase Effective Date Schedule 2.1 shall be deemed to have been
amended to reflect the Incremental Commitments of such Incremental Lender as
provided in such Accession Agreement.

 

SECTION 2.19  Termination and Reduction of Commitments
and Deposit L/C Specified Amount. 
(a)  Termination of Commitments; Cancellation of Deposit
L/C Specified Amount.  Unless
previously terminated or cancelled, (i) the Term Commitments shall
automatically 

 

66

 

terminate at 5:00 p.m.,
New York City time, on the Closing Date, (ii) the Revolving Commitments
shall automatically terminate on the Revolving Maturity Date and (iii) the
Deposit L/C Specified Amount shall be automatically cancelled on the Term
Maturity Date.

 

(b)           Reduction of Revolving Commitments.  EnergySolutions may at any time terminate, or
from time to time permanently reduce, the Revolving Commitments; provided
that (i) each partial reduction of the Revolving Commitments shall be in
an amount that is an integral multiple of $1,000,000 and not less than
$5,000,000 and (ii) EnergySolutions shall not terminate or reduce the
Revolving Commitments if, after giving effect to any concurrent prepayment of
Revolving Loans in accordance with Section 2.11(a), the Aggregate
Revolving Exposure would exceed the Aggregate Revolving Commitment.

 

(c)           Reduction of the Deposit L/C
Specified Amount.  EnergySolutions
may at any time cancel, or from time to time permanently reduce by an amount
that is an integral multiple of $1,000,000 and not less than $5,000,000, the
Deposit L/C Specified Amount; provided that the prepayment of Term Loans
required by Section 2.11(e) shall be effected as provided in such
Section; and provided  further that no cancellation or partial
reduction of the Deposit L/C Specified Amount shall be permitted hereunder if
after giving effect thereto and the foregoing prepayments of Term Loans, the
Deposit L/C Escrow Account Balance shall be less than the greater of (i) the
Deposit L/C Exposure and (ii) the Deposit L/C Specified Amount.

 

(d)           Borrower Notice.  EnergySolutions shall notify the
Administrative Agent of any election to terminate, cancel or reduce the
Revolving Commitments or the Deposit L/C Specified Amount under this
Section 2.19 at least three Business Days prior to the effective date of
such termination, cancellation or reduction, specifying the effective date
thereof.  Such notice, in the case of the
cancellation or reduction of the Deposit L/C Specified Amount, shall be
accompanied by a certificate signed by an Authorized Signatory of
EnergySolutions certifying (i) as to whether a Default has occurred and is
continuing and (ii) that all requirements set forth in Section 2.19(c) with
respect to the cancellation or reduction of the Deposit L/C Specified Amount
have been and will be satisfied. 
Promptly following receipt of any such notice and certificate, if
applicable, the Administrative Agent shall advise the Revolving Lenders, or the
Deposit Issuing Banks and the Term Lenders, as applicable, of the contents
thereof.  Each notice delivered by
EnergySolutions pursuant to this Section 2.19 shall be irrevocable (it
being agreed that such notice may state that it is conditioned upon the
occurrence of one or more events specified therein, in which case such notice
may be revoked by EnergySolutions (by notice to the Administrative Agent on or
prior to the specified effective date) if such condition is not satisfied).  Each termination, cancellation or reduction
of the Revolving Commitments or the Deposit L/C Specified Amount effected
pursuant to this Section 2.19 shall be permanent and, in the case of a
partial reduction of the Revolving Commitments, shall be made ratably among the
Revolving Lenders in accordance with their respective Revolving Commitments.

 

SECTION 2.20  Mitigation Obligations; Replacement of
Lenders.  (a)  If any
Lender requests compensation under Section 2.16, or if EnergySolutions is
required to pay any additional amount to any Lender or to any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then
such Lender shall use commercially reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign and
delegate its rights and obligations hereunder to another of its offices,
branches or Affiliates if, in 

 

67

 

the judgment of such
Lender, such designation or assignment and delegation (i) would eliminate
or reduce amounts payable pursuant to Section 2.16 or 2.17, as the case
may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender in any respect deemed material by it. 
EnergySolutions hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment
and delegation.

 

(b)           If (i) any Lender requests
compensation under Section 2.16, (ii) EnergySolutions is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, (iii) any Lender has
become a Defaulting Lender hereunder or (iv) any Lender has failed to
consent to a proposed amendment, waiver, discharge or termination that under Section 10.10
requires the consent of all the Lenders (or all the affected Lenders or all the
Lenders of the affected Class) and with respect to which the Majority Lenders
(or, in circumstances where Section 10.10 does not require the consent of
the Majority Lenders, a Majority in Interest of the Lenders of the affected
Class) shall have granted their consent, then EnergySolutions may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in Section 10.10), all its
interests, rights and obligations under this Agreement and the other Loan
Documents (or, in the case of any such assignment and delegation resulting from
a failure to provide a consent, all its interests, rights and obligations under
this Agreement and the other Loan Documents as a Lender of a particular Class)
to an Eligible Assignee that shall assume such obligations (which may be
another Lender, if a Lender accepts such assignment and delegation); provided
that (A) EnergySolutions shall have received the prior written consent of
the Administrative Agent (and, if a Revolving Commitment is being assigned,
each Revolving Issuing Bank), which consent shall not unreasonably be withheld,
(B) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in Revolving L/C Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee or EnergySolutions, (C) in the case of any
such assignment and delegation resulting from a claim for compensation under Section 2.16
or payments required to be made pursuant to Section 2.17, such assignment
will result in a reduction in such compensation or payments and (D) in the
case of any such assignment and delegation resulting from the failure to
provide a consent, the assignee shall have given such consent and, as a result
of such assignment and delegation and any contemporaneous assignments and
delegations and consents, the applicable amendment, waiver, discharge or
termination can be effected.  A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver or consent by such Lender or otherwise, the
circumstances entitling EnergySolutions to require such assignment and
delegation have ceased to apply.  Each
party hereto agrees that an assignment and delegation required pursuant to this
paragraph may be effected pursuant to an Assignment and Assumption executed by
EnergySolutions, the Administrative Agent and the assignee and that the Lender
required to make such assignment and delegation need not be a party thereto.

 

SECTION 2.21  Defaulting Lenders.  Notwithstanding any provision of this
Agreement referring to Pro Rata Shares or ratable allocation of payments or any
other provision of this Agreement to the contrary, if any Revolving Lender
becomes a Defaulting Lender, then the following provisions shall apply for so
long as such Revolving Lender is a Defaulting Lender:

 

68

 

(a)           commitment fees shall cease to accrue
on the unused amount of such Defaulting Lender’s Revolving Commitment pursuant
to Section 2.9(b);

 

(b)           the Commitment and Revolving Exposure
of such Defaulting Lender shall not be included in determining whether the
Majority Lenders or other requisite Lenders have taken or may take any action
hereunder (including any consent to any amendment, waiver or other modification
pursuant to Section 10.10); provided that this clause (b) shall
not apply to the vote of a Defaulting Lender in the case of an amendment,
waiver or other modification requiring the consent of all Lenders or of all
Lenders affected thereby;

 

(c)           if any Revolving L/C Exposure exists
at the time such Revolving Lender becomes a Defaulting Lender:

 

(i)            all or any part of the Revolving L/C
Exposure of such Defaulting Lender shall be reallocated among the
Non-Defaulting Lenders in accordance with their respective Pro Rata Shares but
only to the extent the sum of all Non-Defaulting Lenders’ Revolving Exposures
plus such Defaulting Lender’s Revolving L/C Exposure does not exceed the total
of all Non-Defaulting Lenders’ Revolving Commitments;

 

(ii)           if the reallocation described in
clause (i) above cannot, or can only partially, be effected,
EnergySolutions shall within one Business Day following notice by the
Administrative Agent cash collateralize for the benefit of the Revolving
Issuing Banks only EnergySolutions’ obligations corresponding to such
Defaulting Lender’s Revolving L/C Exposure (after giving effect to any partial
reallocation pursuant to clause (i) above) in accordance with the
procedures set forth in Section 2.6(l) for so long as such Revolving
L/C Exposure is outstanding;

 

(iii)          in the event EnergySolutions fails to
make timely payment of a Revolving L/C Disbursement in accordance with Section 2.6(h) and
the Revolving Lenders are required to fund participations or Revolving Loans
under Section 2.6(h) in respect of any unreimbursed Revolving L/C
Disbursement, then, prior to any such funding by the Revolving Lenders of
participations or Revolving Loans, cash collateral deposited by EnergySolutions
in accordance with clause (ii) above, if any, shall be applied to the
reimbursement of the non-reallocated portion of such unreimbursed Revolving L/C
Disbursement (which will then be deemed reimbursed or paid for all purposes
hereof), and the Revolving Lenders (other than such Defaulting Lender) will
fund such participations or Revolving Loans in the amounts reflecting their
individual Pro Rata Shares of the then unreimbursed amount of such Revolving
L/C Disbursement (after giving effect to the foregoing application of cash
collateral);

 

(iv)          if EnergySolutions cash collateralizes
any portion of such Defaulting Lender’s Revolving L/C Exposure pursuant to
clause (ii) above, EnergySolutions shall not be required to pay any participation
fees to such Defaulting Lender pursuant to Section 2.9(c) with
respect to such Defaulting Lender’s Revolving L/C Exposure during the period
such Defaulting Lender’s Revolving L/C Exposure is cash collateralized;

 

69

 

(v)           if the Revolving L/C Exposure of such
Defaulting Lender is reallocated pursuant to clause (i) above, then the
commitment fees and participation fees payable to the Revolving Lenders
pursuant to Sections 2.9(c) and 2.9(d) shall be adjusted in
accordance with the Non-Defaulting Lenders’ Pro Rata Shares; and

 

(vi)          if all or any portion of such
Defaulting Lender’s Revolving L/C Exposure is neither reallocated nor cash
collateralized pursuant to clause (i) or (ii) above, then, without prejudice
to any rights or remedies of any Revolving Issuing Bank or any other Revolving
Lender hereunder, all participation fees payable under Section 2.9(c) with
respect to such Defaulting Lender’s Revolving L/C Exposure shall be payable to
the applicable Revolving Issuing Bank until and to the extent that such
Revolving L/C Exposure is reallocated and/or cash collateralized;

 

(d)           notwithstanding anything to the
contrary contained herein, so long as such Revolving Lender is a Defaulting
Lender, any prepayment or repayment of Revolving Loans hereunder shall be
applied, first, to the payment of the Revolving Borrowings in which such
Revolving Lender did not participate, and, then, to the payment of all
other Revolving Borrowings; and

 

(e)           so long as such Revolving Lender is a
Defaulting Lender, no Revolving Issuing Bank shall be required to issue, amend
or increase any Revolving Letter of Credit, unless it is satisfied that the
related exposure and the Defaulting Lender’s then outstanding Revolving L/C
Exposure will be fully covered by the Revolving Commitments of the
Non-Defaulting Lenders and/or cash collateral will be provided by
EnergySolutions in accordance with Section 2.21(c), and participating
interests in any such newly issued or increased Revolving Letter of Credit
shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.21(a)(i) (and
such Defaulting Lender shall not participate therein).

 

If
(i) a Bankruptcy Event with respect to any Revolving Lender’s parent
entity shall occur following the date hereof and for so long as such event
shall continue or (ii) any Revolving Issuing Bank has a good faith belief
that any Revolving Lender has defaulted in fulfilling its obligations under one
or more other agreements in which such Revolving Lender commits to extend
credit, such Revolving Issuing Bank shall not be required to issue, amend or
increase any Revolving Letter of Credit unless it shall have entered into
arrangements with EnergySolutions or such Revolving Lender, satisfactory to
such Revolving Issuing Bank, to defease any risk to such Revolving Issuing Bank
in respect of such Revolving Lender hereunder.

 

In
the event that the Administrative Agent, EnergySolutions and each Revolving
Issuing Bank agree that a Defaulting Lender has adequately remedied all matters
that caused such Revolving Lender to be a Defaulting Lender, then the Revolving
L/C Exposure of the Revolving Lenders shall be readjusted to reflect the
inclusion of such Lender’s Revolving Commitment and on such date such Revolving
Lender shall purchase at par such of the Revolving Loans of the other Revolving
Lenders as the Administrative Agent shall determine may be necessary in order
for such Lender to hold such Revolving Loans in accordance with its Pro Rata
Share.

 

70

 

ARTICLE III

 

Conditions
Precedent

 

SECTION 3.1  Closing Date.  The obligations of the Lenders to make Loans
and of the Issuing Banks to issue Letters of Credit hereunder shall not become
effective until the date on which each of the conditions precedent set forth in
this Section 3.1 shall be satisfied (or waived in accordance with
Section 10.10):

 

(a)           The Administrative Agent shall have
received (i) counterparts of this Agreement duly executed by Parent,
EnergySolutions, the Administrative Agent and the other parties hereto (or
evidence satisfactory to the Administrative Agent, which may include a
facsimile or other electronic transmission, that each of the parties hereto has
signed a counterpart of this Agreement) and (ii) such other documents and
agreements as the Administrative Agent shall reasonably determine necessary to
evidence the Commitments, Guarantees and Liens created pursuant to this
Agreement and the other Loan Documents, all in form and substance satisfactory
to the Administrative Agent.

 

(b)           The Administrative Agent shall have
received, for each Loan Party, (i) a Loan Certificate, signed by the
secretary or assistant secretary of such Loan Party and dated the Closing Date,
containing a certificate of incumbency with respect to each Authorized Signatory
of such Loan Party and attaching: (A) a true, complete and correct copy of
the certificate or articles of incorporation, certificate of formation or other
organizational document, including all amendments thereto, of such Loan Party,
certified as of a recent date by the Secretary of State or similar official of
the state of organization of such Loan Party, (B) a certificate as to the
good standing of such Loan Party in its state of organization and each other
state in which it is required to qualify or has qualified to do business, in
each case issued as of a recent date by the Secretary of State or similar
official of each such state, (C) a true, complete and correct copy of the
resolutions of the board of directors or other governing body of such Loan
Party, authorizing the execution, delivery and performance of the Loan
Documents to which such Loan Party is a party, (D) a true, complete and
correct copy of the bylaws, operating agreement or comparable document of such
Loan Party, as in effect on the Closing Date and at the time of adoption of the
resolutions referred to in clause (C) above and (E) a true, complete
and correct copy of any agreement in effect as of the Closing Date with respect
to the voting rights, ownership interests or management of such Loan Party and (ii) such
other documents and certificates as the Administrative Agent may reasonably
request relating to the organization, existence and good standing of the Loan
Parties, the authorization of the Transactions and any other legal matters
relating to the Loan Parties, the Loan Documents or the Transactions, all in
form and substance satisfactory to the Administrative Agent.

 

(c)           The Administrative Agent shall have
received a certificate, dated the Closing Date and signed by the chief
executive officer or the chief financial officer of each of Parent and
EnergySolutions, confirming compliance with the conditions set forth in
Sections 3.1(g), 3.1(k), 3.1(l), 3.2(a) and 3.2(b).

 

(d)           The Administrative Agent shall have
received (i) the results of a recent lien search in each jurisdiction
contemplated by the Perfection Certificate (including in the United States 

 

71

 

Patent and Trademark
Office and the United States Copyright Office) with respect to each Loan Party,
(ii) copies of the financing statements (or similar documents) disclosed
by such lien search and (iii) evidence reasonably satisfactory to the
Administrative Agent that the Liens indicated by such financing statements (or
similar documents) are Permitted Liens or have been, or substantially
contemporaneously with the initial funding of the Loans on the Closing Date
will be, released.

 

(e)           The Administrative Agent shall have
received favorable written legal opinions (addressed to the Administrative
Agent, the Lenders and the Issuing Banks and dated the Closing Date) of (i) Weil,
Gotshal & Manges LLP, counsel to EnergySolutions and certain other
Loan Parties, (ii) Parr Brown Gee & Loveless, Utah counsel to
EnergySolutions and certain other Loan Parties, (iii) Stites &
Harbison, PLLC, Tennessee counsel to EnergySolutions and certain other Loan
Parties, (iv) Morgan, Lewis & Bockius, regulatory counsel to
EnergySolutions and the Loan Parties and (iv) local counsel to
EnergySolutions and the other Loan Parties in each jurisdiction where a
Mortgaged Property is located, and the laws of which are not covered by the
opinions referred to in clauses (i) through (iii) above, in form and
substance reasonably satisfactory to the Administrative Agent and its counsel.

 

(f)            The Administrative Agent shall have
received a completed Perfection Certificate, dated the Closing Date and signed
by an Authorized Signatory of each Loan Party, together with all attachments
contemplated thereby.

 

(g)           The Collateral and Guarantee
Requirement shall have been satisfied.

 

(h)           The Administrative Agent shall have
received copies of reasonably satisfactory insurance brokers’ letters, binders
or certificates covering the assets of Parent, EnergySolutions and each of their
respective Subsidiaries and otherwise meeting the requirements of
Section 5.5, together with endorsements naming the Administrative Agent,
for the benefit of the Secured Parties, as additional insured and loss payee
thereunder to the extent required by Section 5.5.

 

(i)            The Administrative Agent and the
Arrangers shall have received all fees, expenses and other amounts due and
payable on or prior to the Closing Date required to be paid under the Fee
Letter or any Loan Document, including reimbursement or payment of all
out-of-pocket expenses (including the reasonable fees, disbursements and other
charges of Cravath, Swaine & Moore LLP, counsel for the Administrative
Agent and the Arrangers) required to be reimbursed or paid by EnergySolutions,
for which invoices have been presented to EnergySolutions on or prior to the
Closing Date.

 

(j)            The Administrative Agent shall have
received (i) evidence reasonably satisfactory to it that all Necessary
Authorizations have been obtained, are in full force and effect and are not
subject to any pending or threatened reversal or cancellation and (ii) a
certificate, dated the Closing Date and signed by an Authorized Signatory of
each of Parent and EnergySolutions, confirming the foregoing.

 

(k)           Prior to or substantially concurrently
with the initial funding of the Loans on the Closing Date, all principal,
premium, if any, interest, fees and other amounts due or outstanding under the
Existing Credit Agreements shall have been or shall be paid in full, all
letters of credit 

 

72

 

issued thereunder shall
have been or shall be terminated or cash collateralized or shall have become
Existing Letters of Credit, the commitments thereunder shall have been or shall
be terminated and all Guarantees and Liens existing in connection therewith
shall have been or shall be discharged and released, and the Administrative
Agent shall have received reasonably satisfactory evidence of the
foregoing.  Immediately after giving
effect to the Transactions to be consummated on the Closing Date, none of
Parent, EnergySolutions or any of their respective Subsidiaries shall have
outstanding any Indebtedness other than (i) Indebtedness incurred under
the Loan Documents, (ii) the Senior Notes and (iii) other Indebtedness
set forth on Schedule 7.1.

 

(l)            Parent and EnergySolutions shall
have received, or substantially contemporaneously with the initial funding of
Loans on the Closing Date shall receive, gross cash proceeds of not less than
$300,000,000 from the issuance of the Senior Notes.  The Administrative Agent shall have received
a copy of the Senior Notes Documents, certified by an Authorized Signatory of
Parent and EnergySolutions as being true, complete and correct, and the terms
and conditions of the Senior Notes and the provisions of the Senior Notes
Documents shall be reasonably satisfactory to the Administrative Agent.

 

(m)          All intercompany Indebtedness of the
Loan Parties shall have been subordinated to their respective obligations under
the Loan Documents, in each case pursuant to a Subordination Agreement.

 

(n)           The Administrative Agent shall have
received the Historical Financial Statements and annual financial projections
(which, in the case of such projections for the year 2010, shall be presented
on a quarterly basis) for Parent and its consolidated Subsidiaries for the
years 2010 through 2014.

 

(o)           The Administrative Agent shall have
received a certificate, dated the Closing Date and signed by the chief
financial officer of each of Parent and EnergySolutions, in form and substance
satisfactory to the Administrative Agent, together with such other evidence
reasonably requested by the Administrative Agent, confirming that the Loan
Parties are Solvent on a consolidated basis after giving effect to the
Transactions.

 

(p)           Parent and EnergySolutions shall have
established procedures, satisfactory to the Administrative Agent, for the
deposit of $310,000,000 of the proceeds of the Term Loans on the Closing Date
in the Deposit L/C Escrow Account.

 

(q)           The Lenders shall have received all
documentation and other information required by bank regulatory authorities
under applicable “know your customer” and anti-money laundering rules and
regulations, including the Patriot Act.

 

Notwithstanding
the foregoing, if Parent and EnergySolutions shall have used commercially
reasonable efforts to procure and deliver, but shall nevertheless be unable to
deliver, any Control Agreement, Mortgage Policy, survey with respect to any
Mortgaged Property or any certificate representing Equity Interests in any Loan
Party in each case set forth on Schedule 5.17, that is required to be delivered
in order to satisfy the requirements of the Collateral and Guarantee
Requirement, such delivery shall not be a condition precedent to the 

 

73

 

obligations
of the Lenders and the Issuing Banks hereunder on the Closing Date, but shall
be required to be accomplished as provided in Section 5.17.

 

The
Administrative Agent shall notify Parent, EnergySolutions and the Lender
Parties of the Closing Date, and such notice shall be conclusive and
binding.  Notwithstanding the foregoing,
the obligations of the Lenders to make Loans and of the Issuing Banks to issue
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions shall have been satisfied (or waived in accordance with
Section 10.10) at or prior to 5:00 p.m., New York City time, on December 31,
2010 (and, in the event such conditions shall not have been so satisfied or
waived, the Commitments shall terminate at such time).

 

SECTION 3.2  Each Credit Event.  The obligation of the Lenders to make Loans
on the occasion of any Borrowing (including the initial funding of the Loans on
the Closing Date) and of the Issuing Banks to issue, amend, renew or extend
Letters of Credit hereunder is subject to the satisfaction (or waiver in
accordance with Section 10.10) of the following conditions precedent:

 

(a)           All of the representations and
warranties of the Loan Parties set forth in this Agreement and the other Loan
Documents shall be true and correct in all material respects (and, in the case
of any representation and warranty that is already qualified or modified by
materiality in the text thereof, in all respects) as of the date of such
Borrowing or the date of such issuance, amendment, renewal or extension of a
Letter of Credit, as applicable, as if made on such date (except to the extent
any such representation and warranty expressly relates to an earlier date, in
which case such representation and warranty shall be true and correct as of
such earlier date), before as well as after giving effect such Borrowing, such
issuance, amendment, renewal or extension of a Letter of Credit or the
application of the proceeds from any of the foregoing.

 

(b)           No Default shall have occurred and be
continuing or would result from such Borrowing, such issuance, amendment,
renewal or extension of a Letter of Credit or the application of proceeds from
any of the foregoing.

 

(c)           The Administrative Agent shall have
received a duly executed Borrowing Request in accordance with the requirements
hereof.

 

(d)           The Administrative Agent shall have
received any such additional documentary information reasonably requested and
reasonably satisfactory to the Administrative Agent confirming the satisfaction
of any of the foregoing conditions in this Section 3.2 if, in the good
faith judgment of Administrative Agent, such request is warranted under the
circumstances.

 

On
the date of any Borrowing or the issuance, amendment, renewal or extension of
any Letter of Credit, Parent and EnergySolutions shall be deemed to have
represented and warranted that the conditions specified in paragraphs (a) and
(b) of this Section 3.2 have been satisfied and that, after giving
effect to such Borrowing, or such issuance, amendment, renewal or extension of
a Letter of Credit, the Aggregate Revolving Exposure (or any component thereof)
shall not exceed the maximum amount thereof (or the maximum amount of any such
component) specified in this Agreement.

 

74

 

ARTICLE IV

 

Representations
and Warranties

 

Each
of Parent and EnergySolutions hereby agrees, represents and warrants in favor
of the Administrative Agent and each Lender Party that:

 

SECTION 4.1  Organization; Ownership; Power;
Qualification.  Parent,
EnergySolutions and each of their respective Subsidiaries is (a) duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all necessary power and
authority and all material Necessary Authorizations to own its properties and
to carry on its business as now being and hereafter proposed to be conducted
and (c) is duly qualified, in good standing and authorized to do business
in each jurisdiction (other than its jurisdiction of organization) in which the
character of its properties or the nature of its business makes such
qualification or authorization prudent, except where the failure to be so
qualified and in good standing, individually or in the aggregate with all other
exceptions to the representations and warranties in Section 4.4(d), could
not reasonably be expected to result in a Material Adverse Change.

 

SECTION 4.2  Authorization; Enforceability.  Parent, EnergySolutions and each of their
respective Subsidiaries has the power and has taken all necessary action to
authorize it to borrow hereunder, to execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party in
accordance with their respective terms and to consummate the Transactions and
the other transactions contemplated hereby and thereby.  This Agreement has been duly executed and
delivered by each of Parent and EnergySolutions and constitutes, and each other
Loan Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party, will constitute, the legal, valid and binding
obligation of Parent, EnergySolutions or such Loan Party, as the case may be,
enforceable against it in accordance with its terms, subject, as to enforcement
of remedies, to the following qualifications: 
(i) an order for specific performance and an injunction are
discretionary remedies and may not be available where damages are considered an
adequate remedy at law, (ii) enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other similar laws
affecting enforcement of creditors’ rights generally (insofar as any such law
relates to the bankruptcy, insolvency or similar event of Parent, EnergySolutions
or any of their respective Subsidiaries, as the case maybe), (iii) enforcement
may be subject to general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law) and may be
limited by public policies which may affect the enforcement of certain rights
or remedies provided for in this Agreement or the other Loan Documents and (iv) enforcement
may be subject to Applicable Law requiring regulatory approvals prior to any
direct or indirect transfer of control of Licenses and Environmental Permits.

 

SECTION 4.3 
Subsidiaries and Joint Ventures. 
Schedule 4.3A sets forth, as of the Closing Date, the name and
jurisdiction of organization of, and the percentage of each class of Equity
Interests owned by Parent, EnergySolutions or any other Subsidiary, in (a) each
Subsidiary and (b) each joint venture in which Parent, EnergySolutions or
any other Subsidiary owns any Equity Interests, and identifies each Subsidiary
Guarantor and each Special Purpose Subsidiary. 
Except as set forth on Schedule 4.3B, EnergySolutions has the
unrestricted right to 

 

75

 

vote
the issued and outstanding shares of its Subsidiaries organized as corporations
and the unrestricted right to vote its partnership and membership interests in
its Subsidiaries organized as partnerships or limited liability companies in
accordance with the terms of the applicable partnership agreement or operating
agreement.  The shares of all
Subsidiaries of Parent organized as corporations have been duly authorized and
issued and are fully paid and nonassessable.

 

SECTION 4.4  Consents; Conflicts; Liens.  Except as set forth on Schedule 4.4, the
execution, delivery and performance of this Agreement and the other Loan
Documents by Parent, EnergySolutions and each of their respective Subsidiaries
and the consummation of the Transactions, do not and will not (a) require
any material consent or approval, governmental or otherwise, not already
obtained, (b) violate any Applicable Law, (c) conflict with, result
in a breach of or constitute a default under the certificate or articles of
incorporation or other organizational document, by-laws, operating agreement,
partnership agreement or comparable document of Parent, EnergySolutions or any
of their respective Subsidiaries, or under any material indenture, agreement or
other instrument to which Parent, EnergySolutions or any of their respective
Subsidiaries is a party or by which any of them or their respective properties
may be bound, (d) conflict with, result in a breach of or constitute a
default or violation of the terms and conditions of any of the Necessary
Authorizations, except in the case of any conflict, breach, default or
violation of any Environmental Permit that could not reasonably be expected to
result, individually or in the aggregate with all other exceptions to the
representations and warranties in Section 4.1(c), in a Material Adverse
Change or (e) result in or require the creation or imposition of any Lien
upon or with respect to any property now owned or hereafter acquired by Parent,
EnergySolutions or any of their respective Subsidiaries except for Permitted
Liens.

 

SECTION 4.5  Business.  Parent, EnergySolutions and each of their
respective Subsidiaries is engaged in the business of owning, operating and
investing in the Permitted Businesses.

 

SECTION 4.6  Necessary Authorizations.  The Necessary Authorizations have been duly
authorized by the grantors thereof and are in full force and effect.  Parent, EnergySolutions and each of their
respective Subsidiaries is in compliance in all material respects with all
provisions of the Necessary Authorizations. 
Parent, EnergySolutions and each of their respective Subsidiaries has
secured all Necessary Authorizations and all such Necessary Authorizations are
in full force and effect.  None of the
material Necessary Authorization is the subject of any pending or, to the
knowledge of Parent or EnergySolutions, threatened revocation.

 

SECTION 4.7  Compliance with Law.  Parent, EnergySolutions and each of their
respective Subsidiaries is in compliance with all Applicable Laws except to the
extent the failure to do so could not reasonably be expected to result in a
Material Adverse Change.

 

SECTION 4.8  Title to Assets.  Parent, EnergySolutions and each of their
respective Subsidiaries has (a) good, defensible, insurable, legal and
beneficial fee simple title to (in the case of fee interests in real property),
(b) valid and enforceable leasehold interests in (in the case of leasehold
interests in real or personal property) and (c) good and defensible title
to (in the case of all other personal property), all of its properties, and no
such properties are subject to any Liens except for Permitted Liens.

 

76

 

SECTION 4.9  Litigation.  Except as set forth on Schedule 4.9, there is
no action, suit, revocation, proceeding or investigation pending against or, to
knowledge of Parent or EnergySolutions, threatened against or in any other
manner relating adversely to, Parent, EnergySolutions or any of their
respective Subsidiaries or any of their respective properties, including any of
the Necessary Authorizations, in any court or before any arbitrator of any kind
or before or by any Governmental Authority, which (a) challenges the
validity of this Agreement or any other Loan Document, (b) challenges the
continued possession and use of any License by Parent, EnergySolutions or any
of their respective Subsidiaries or any Person in which EnergySolutions has,
directly or indirectly, an Investment, and such challenge could result in a
Default or Event of Default pursuant to Section 8.1(k) or (c) could
reasonably be expected to result in a Material Adverse Change.

 

SECTION 4.10  Taxes. 
Except as set forth on Schedule 4.10, all Federal, state and other
tax returns (including information returns) of Parent, EnergySolutions and each
of their respective Subsidiaries required by law to be filed have been duly
filed, and all Federal, state and other Taxes, including withholding taxes,
assessments and other governmental charges or levies required to be paid by
Parent, EnergySolutions or any of their respective Subsidiaries or imposed upon
Parent, EnergySolutions or any of their respective Subsidiaries or any of their
respective properties, income, profits or assets, which are due and payable,
have been paid, except (a) any such Taxes (i) the payment of which is
being contested by Parent, EnergySolutions or any of their respective
Subsidiaries, in good faith by appropriate proceedings, (ii) for which
adequate reserves in accordance with GAAP have been provided on the books of
Parent, EnergySolutions and each of their respective Subsidiaries and (iii) as
to which no Lien other than a Permitted Lien has attached and no foreclosure,
distraint, sale or similar proceedings have been commenced or (b) to the
extent the failure of such tax returns to have been so filed or such Taxes to
have been paid could not reasonably be expected to have a Material Adverse
Change.  Parent, EnergySolutions and each
of their respective Subsidiaries has made adequate provision in accordance with
GAAP for all Taxes not yet due and payable, except as could not reasonably be
expected to, individually or in the aggregate, have a Material Adverse
Change.  Parent, EnergySolutions and each
of their respective Subsidiaries is unaware of any proposed or pending tax
assessments, deficiencies or audits that could be reasonably expected to,
individually or in the aggregate, result in a Material Adverse Change.  None of Parent, EnergySolutions or any of
their respective Subsidiaries has ever been a party to any understanding or
arrangement constituting a “tax shelter” within the meaning of Section 6662(d)(2)(C)(iii) of
the Code or within the meaning of Section 6111(c) or Section 6111(d) of
the Code as in effect immediately prior to the enactment of the American Jobs
Creation Act of 2004, or has ever “participated” in a “reportable transaction”
within the meaning of Treasury Regulation Section 1.6011-4, except as
could not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Change.  EnergySolutions
is “disregarded as an entity separate from its owner” within the meaning of
Treasury Regulation Section 301.7701-3 for U.S. Federal income purposes
and is classified substantially similarly for all relevant state and local tax
purposes.

 

SECTION 4.11  Financial Statements.  Parent has furnished or caused to be
furnished to the Administrative Agent and the Lenders audited consolidated
financial statements for the fiscal year ended December 31, 2009 and
unaudited consolidated financial statements for the fiscal quarters ended March 31,
2010 and June 30, 2010 (the “Historical Financial Statements”),
which are complete and correct in all material respects and present fairly in
accordance with GAAP the 

 

77

 

financial position of
Parent and its Subsidiaries on a consolidated basis on and as at such dates and
the results of operations for the periods then ended.  Except as provided on Schedule 4.10, as
of the Closing Date, none of Parent, EnergySolutions or any of their respective
Subsidiaries has any material liabilities, contingent or otherwise, unusual
long-term commitments or unrealized losses other than (a) as disclosed in
the Historical Financial Statements or the financial statements delivered
pursuant to Section 6.1 or 6.2 and (b) as could not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Change.

 

SECTION 4.12  No Material Adverse Change.  Since December 31, 2009, there has
occurred no circumstance, event or condition which has had or which could
reasonably be expected to have a Material Adverse Change.

 

SECTION 4.13  ERISA. 
Parent, EnergySolutions, each of their respective Subsidiaries and each
of their respective Plans is in compliance in all respects with ERISA and the
Code, including Section 4980B of the Code, except as could not reasonably
be expected to have a Material Adverse Change. 
None of Parent, EnergySolutions or any of their respective Subsidiaries
has failed to meet any minimum funding standards within the meaning of Section 412
of the Code or Section 302 of ERISA with respect to any Plan.  No ERISA Affiliate has failed to meet any
minimum funding standards within the meaning of Section 412 of the Code or
Section 302 of ERISA with respect to any ERISA Affiliate Plan, except as
could not reasonably be expected to have a Material Adverse Change.  No Reportable Event, for which the 30-day
notice requirement has not been waived, has occurred and is continuing with
respect to any Plan, except as could not reasonably be expected to result in a
Material Adverse Change.  No Plan or
trust created thereunder, or “party in interest” (as defined in Section 3(14)
of ERISA), or any fiduciary (as defined in Section 3(21) of ERISA), has
engaged in a “prohibited transaction” (as such term is defined in Section 406
of ERISA or Section 4975 of the Code) which would reasonably be expected
to subject Parent or any of its Subsidiaries to a tax or penalty in any amount
on “prohibited transactions” imposed by Section 502 of ERISA or Section 4975
of the Code or an obligation to indemnify any other person for such tax or
penalty, except as could not reasonably be expected to result in a Material
Adverse Change.  None of Parent,
EnergySolutions, any of their respective Subsidiaries or any of their
respective ERISA Affiliates has received a determination that any Plan is, or
is expected to be in “at risk” status (as defined in Section 303(i)(4) of
ERISA or 430(i)(4) of the Code) except as could not be reasonably be
expected to result in a Material Adverse Change.  None of Parent, EnergySolutions, any of their
respective Subsidiaries or any of their respective ERISA Affiliates (a) has
incurred or reasonably expects to incur any liability with respect to a
withdrawal from any Multiemployer Plan except as could not reasonably be
expected to have a Material Adverse Change, or (b) has received any notice
concerning a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA, except
as could not reasonably be expected to have a Material Adverse Change.

 

SECTION 4.14  Compliance with Margin Regulations.  None of Parent, EnergySolutions or any of
their respective Subsidiaries is engaged principally in or has as one of its
important activities the business of purchasing or carrying, or extending
credit for the purpose of purchasing or carrying, any margin stock within the
meaning of Regulations U of the Board of Governors of the Federal Reserve
System nor will any proceeds of the Loans or Letters of Credit be used for any
such purpose.

 

78

 

SECTION 4.15  Investment Company Act.  None of Parent, EnergySolutions or any of
their respective Subsidiaries is required to register under the provisions of
the Investment Company Act of 1940.  The
execution and performance by Parent, EnergySolutions and each of their
respective Subsidiaries of this Agreement and the other Loan Documents does not
violate any provision of such Act or require any consent, approval or
authorization of, or registration with, the SEC or any other Governmental
Authority pursuant thereto.

 

SECTION 4.16  Governmental Regulation.  Except as set forth on Schedule 4.16,
none of Parent, EnergySolutions or any of their respective Subsidiaries is
required to obtain any consent, approval, authorization, permit or license
which has not already been obtained from, or effect any filing or registration
which has not already been effected with, any Governmental Authority in
connection with the execution, delivery and performance of this Agreement and
the other Loan Documents.

 

SECTION 4.17  Absence of Defaults.  Parent, EnergySolutions and each of their
respective Subsidiaries is in compliance in all respects with all provisions of
its certificate or articles of incorporation or other organizational documents
and by-laws, operating agreement, partnership agreement or comparable document,
as the case may be, and no circumstance, event or condition has occurred or
failed to occur (including any circumstance, event or condition which could
create a Default hereunder by cross-default) which has not been remedied or
waived, the occurrence or non-occurrence of which constitutes, or with the
passage of time or giving of notice or both would constitute, (a) an Event
of Default or (b) a material default by Parent, EnergySolutions or any of
their respective Subsidiaries under any material agreement or other instrument
relating to Indebtedness of Parent, EnergySolutions or any of their respective
Subsidiaries in the amount of $5,000,000 or more, any of the Necessary
Authorizations, or any judgment, decree or order in the amount of $5,000,000 or
more to which Parent, EnergySolutions or any of their respective Subsidiaries
is a party or by which Parent, EnergySolutions or any of their respective
Subsidiaries or any of their respective properties may be bound or
affected.  None of Parent,
EnergySolutions or any of their respective Subsidiaries is a party to or bound
by any contract or agreement continuing after Closing Date, or bound by any
Applicable Law, that could have a Material Adverse Change or result in the loss
of any License.

 

SECTION 4.18  Accuracy and Completeness of Information.  All information, reports, prospectuses and
other papers and data relating to, and furnished to the Arrangers, the
Administrative Agent or the Lender Parties by or on behalf of, Parent,
EnergySolutions or any of their respective Subsidiaries, were, taken as a
whole, at the time furnished, true, complete and correct in all material
respects to the extent necessary to give the Arrangers, the Administrative
Agent and the Lender Parties true and accurate knowledge of the subject matter
thereof.  No fact or situation is
currently known to Parent or EnergySolutions which has had or could reasonably
be expected to have a Material Adverse Change.

 

SECTION 4.19  Agreements with Affiliates.  Except as set forth on Schedule 4.19 or
otherwise permitted hereunder, none of Parent, EnergySolutions or any of their
respective Subsidiaries has any written agreements or binding arrangements of
any kind with any Affiliate, including any management or consulting agreement.

 

79

 

SECTION 4.20  Collateral Matters.  (a)  The Guarantee and Collateral
Agreement, upon execution and delivery thereof by the parties thereto, will
create in favor of the Administrative Agent, for the benefit of the Secured
Parties, a valid and enforceable security interest in the Collateral (as
defined therein) and (i) when the Collateral (as defined therein)
constituting certificated securities (as defined in the Uniform Commercial Code)
is delivered to the Administrative Agent, together with instruments of transfer
duly endorsed in blank, the security interest created under the Guarantee and
Collateral Agreement will constitute a fully perfected security interest in all
right, title and interest of the pledgors thereunder in such Collateral, prior
and superior in right to any other Person, (ii) when financing statements
in appropriate form are filed in the applicable filing offices, the security
interest created under the Guarantee and Collateral Agreement will constitute a
fully perfected security interest in all right, title and interest of the Loan
Parties in the remaining Collateral (as defined therein) to the extent
perfection can be obtained by filing Uniform Commercial Code financing
statements, prior and superior to the rights of any other Person, except for
rights secured by Permitted Encumbrances and (iii) when the Administrative
Agent obtains control of each Deposit L/C Escrow Account, either through
possession or by entry into a Control Agreement with respect to such account,
the security interest created under the Guarantee and Collateral Agreement in
the Deposit L/C Collateral (as defined therein) in favor of the Secured Parties
will constitute a fully perfected security interest in all right, title and
interest of the pledgors in, to and under the Deposit L/C Collateral, with the
priority set for in the Guarantee and Collateral Agreement, subject only to
Permitted Encumbrances.

 

(b)           Each Mortgage, upon execution and
delivery thereof by the parties thereto, will create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a legal, valid
and enforceable security interest in all the applicable mortgagor’s right,
title and interest in the Mortgaged Properties subject thereto and the proceeds
thereof, and when the Mortgages have been filed in the jurisdictions specified
therein, the Mortgages will constitute a fully perfected security interest in
all right, title and interest of the mortgagors in the Mortgaged Properties and
the proceeds thereof, prior and superior in right to any other Person, but
subject to Permitted Liens that are by operation of law prior and superior to
the rights of the Administrative Agent.

 

(c)           Upon the recordation of the IP
Security Agreements with the United States Patent and Trademark Office or the
United States Copyright Office, as applicable, and the filing of the financing
statements referred to in paragraph (a) of this Section 4.20, the
security interest created under the Guarantee and Collateral Agreement will
constitute a fully perfected security interest in all right, title and interest
of the Loan Parties in the Intellectual Property (as defined in the Guarantee
and Collateral Agreement) in which a security interest may be perfected by
filing in the United States of America, in each case prior and superior in
right to any other Person, but subject to Permitted Encumbrances (it being
understood that subsequent recordings in the United States Patent and Trademark
Office or the United States Copyright Office may be necessary to perfect a
security interest in such Intellectual Property acquired by the Loan Parties
after the Closing Date).

 

(d)           Each Security Document, other than
any Security Document referred to in the preceding paragraphs of this
Section 4.20, upon execution and delivery thereof by the parties thereto
and the making of the filings and taking of the other actions provided for
therein, will be effective under applicable law to create in favor of the
Administrative Agent, for the benefit of

 

80

 

the Secured Parties, a
valid and enforceable security interest in the Collateral subject thereto, and
will constitute a fully perfected security interest in all right, title and
interest of the Loan Parties in the Collateral subject thereto, prior and superior
to the rights of any other Person, except for rights secured by Permitted
Encumbrances (provided that to the extent such Security Document is a “fixture
filing”, such Security Document will constitute a fully perfected security
interest in all rights, title and interest of the Loan Parties in the
Collateral subject thereto, prior and superior to the rights of any other
Person, but subject to Permitted Liens that are by operation of law prior and
superior to the rights of the Administrative Agent).

 

SECTION 4.21  Indebtedness.  None of Parent, EnergySolutions or any of
their respective Subsidiaries has outstanding, as of the Closing Date and after
giving effect to the Transactions to be consummated on the Closing Date, any
Indebtedness other than (a) Indebtedness incurred under the Loan
Documents, (b) the Senior Notes, (c) other Indebtedness permitted
under Section 7.1.

 

SECTION 4.22  Real Property.  As of the Closing Date, other than as set
forth on Schedule 4.22, none of Parent, EnergySolutions or any of their
respective Subsidiaries currently owns or leases, or has previously owned or
leased, any real property.

 

SECTION 4.23  Intellectual Property.  Parent, EnergySolutions and each of their
respective Subsidiaries owns, possesses or is licensed to use all patents,
trademarks, trademark rights, trade names, trade name rights, service marks,
copyrights and other intellectual property necessary to conduct its business in
all respects as now conducted, without known conflict with any such
intellectual property of any other Person, except to the extent that the
failure to so own, possess or be licensed to use any such intellectual property
could not reasonably be expected to result in a Material Adverse Change, and no
such intellectual property of Parent, EnergySolutions or any of their
respective Subsidiaries is subject to any Liens other than Permitted
Liens.  All licenses and rights with
respect to all such intellectual property of Parent, EnergySolutions and each
of their respective Subsidiaries are in full force and effect in all respects,
except to the extent that the failure to so be in full force and effect could
not reasonably be expected to result in a Material Adverse Change, and are not
subject to any pending or, to the knowledge of Parent or EnergySolutions,
threatened attack or revocation.

 

SECTION 4.24  Patriot Act.  None of Parent, EnergySolutions or any of
their respective Subsidiaries is in violation of any laws relating to terrorism
or money laundering, including the Patriot Act.

 

SECTION 4.25  Solvency.  As of the Closing Date, the Loan Parties,
taken as a whole, are, both before and after the making of any Loan, the
issuance of any Letter of Credit and the consummation of any other Transaction
on the Closing Date, Solvent.

 

SECTION 4.26  Environmental Matters.  (a)  Except as, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Change:

 

(i)                                     the operations of Parent, EnergySolutions, each of their respective
Subsidiaries and each of their respective Properties are and have been in
compliance with all applicable Environmental Laws and Environmental Permits,
including obtaining, 

 

81

 

maintaining and
timely applying to obtain, amend or renew all Environmental Permits necessary
for the operations thereof, and none of Parent, EnergySolutions or any of their
respective Subsidiaries has any liability under any such Environmental Laws or
Environmental Permits;

 

(ii)                                  none of Parent, EnergySolutions or any of their respective Subsidiaries,
or any real property currently or previously owned, operated, leased or
undergoing closure, post-closure or decommissioning activities by Parent,
EnergySolutions or any of their respective Subsidiaries or any predecessor thereof,
has become subject to any Environmental Liability;

 

(iii)                               none of Parent, EnergySolutions or any of their respective Subsidiaries
has received notice of any claim or governmental investigation with respect to
any Environmental Liability (including any such claim or investigation seeking
to revoke any Environmental Permit necessary for the operations of Parent,
EnergySolutions or any of their respective Subsidiaries) or, to the knowledge
of Parent or EnergySolutions or any of their respective Subsidiaries, is aware
of any basis for any Environmental Liability;

 

(iv)                              Parent, EnergySolutions and each of their respective Subsidiaries has
obtained and currently maintains all funds required by Applicable Law to secure
all obligations, whether by law or by contract, of Parent, EnergySolutions or
any of their respective Subsidiaries for closure and post-closure care,
including decommissioning, of any property or facility;

 

(v)                                 no Lien has been placed upon any currently owned Property or, to the
knowledge of Parent or EnergySolutions, any leased or operated Property, or to
the knowledge of Parent or EnergySolutions, is threatened to be placed upon any
Property under any Environmental Law;

 

(vi)                              none of Parent, EnergySolutions or any of their respective Subsidiaries,
any past or current facilities or operations of Parent, EnergySolutions or any
of their respective Subsidiaries, or any predecessor of or owner of premises
leased or operated by Parent, EnergySolutions or any of their respective
Subsidiaries, is subject to any outstanding settlement or order, writ,
injunction, ruling, assessment, judgment, plan, arbitration award or decree
from any Person (A) identifying or alleging noncompliance with or
liability under any Environmental Law, (B) requiring any Remedial Action
or (C) requiring payment of any claim with respect to any Environmental
Liability;

 

(vii)                           there is no claim with respect to any Environmental Liability pending
against, or to knowledge of Parent or EnergySolutions, threatened against,
affecting or involving any Person whose liability for such claim has been
assumed, contractually or by the operation of law, by Parent, EnergySolutions
or any of their respective Subsidiaries;

 

(viii)                        none of Parent, EnergySolutions or any of their respective Subsidiaries,
or to the knowledge of Parent or EnergySolutions, any predecessor of or owner
of premises leased or operated by Parent, EnergySolutions, any of their
respective Subsidiaries or any 

 

82

 

predecessor thereof,
has filed any notice under any Environmental Law reporting a Release of
Hazardous Material that is not otherwise authorized under applicable
Environmental Law or the Environmental Permits;

 

(ix)                                there have been no Releases of Hazardous Materials at, on, in or under
any real property now or during the period of ownership, operation or lease by
Parent, EnergySolutions of any of their respective Subsidiaries or otherwise,
to the knowledge of Parent or EnergySolutions, previously owned, operated or
leased, or undergoing closure, post-closure or decommissioning activities, by
Parent, EnergySolutions or any of their respective Subsidiaries, or any
predecessor of Parent, EnergySolutions or any of their respective Subsidiaries,
or at any third-party location at which any of such parties have treated,
recycled, stored or disposed of or arranged for the treatment, recycling,
storage or disposal of wastes, that have given or could give rise to Remedial
Action under any Environmental Law;

 

(x)                                   no real property now or, to the knowledge of Parent or EnergySolutions,
previously owned, leased, operated or undergoing closure, post-closure or
decommissioning activities (collectively, “Site”) by Parent,
EnergySolutions or any of their respective Subsidiaries is listed or proposed
for listing on the National Priorities List pursuant to CERCLA, on the
Comprehensive Environmental Response, Compensation and Liability Information
System List or on any similar list of sites requiring investigation or cleanup
(collectively, “List”), and no Site of any predecessor of Parent,
EnergySolutions or any of their respective Subsidiaries is listed or, to the
knowledge of Parent or EnergySolutions, proposed for listing on any such List;
and

 

(xi)                                to the knowledge of Parent or EnergySolutions, there is no proposed or
introduced legislation, law, rule, regulation or order (including any proposed
or introduced legislation, law, rule, regulation or order under discussion by
any applicable state or local Governmental Authority) relating to applicable
Environmental Laws or the enforcement thereof, or the grant or interpretation
of applicable Environmental Permits, that would result in expenditures or
changes in the operation of the Permitted Business by Parent, EnergySolutions
or any of their respective Subsidiaries.

 

SECTION 4.27  Employee Relations.  Except as set forth on Schedule 4.27, as
of the Closing Date (a) Parent, EnergySolutions and each of their
respective Subsidiaries is not party to any collective bargaining agreement and
(b) no labor union has been recognized as the representative of the
employees of Parent, EnergySolutions or any of their respective Subsidiaries,
and none of Parent, EnergySolutions or any of their respective Subsidiaries is
aware of any pending, threatened or contemplated strikes, work stoppage or
other material labor disputes involving the employees of Parent,
EnergySolutions or any of their respective Subsidiaries.

 

83

 

ARTICLE V

 

General
Covenants

 

So
long as any of the Obligations shall be outstanding and unpaid, any Letter of
Credit shall be outstanding, any L/C Disbursement shall be unreimbursed or
EnergySolutions shall have the right to borrow or request the issuance,
amendment, renewal or extension of any Letter of Credits hereunder (whether or
not the conditions to any such credit extension have been or can be fulfilled),
and unless the Majority Lenders, or such greater number or percentage of
Lenders as may be expressly provided herein, shall otherwise consent in writing:

 

SECTION 5.1  Preservation of Existence and Similar
Matters.  Parent and EnergySolutions
each will, and will cause each of their respective Subsidiaries to:

 

(a)                                  except as otherwise permitted hereunder, preserve and maintain its
existence, rights, franchises, licenses and privileges in the state of its
incorporation, organization or formation and in each other state in which it
operates a material part of its business, including the Necessary
Authorizations (other than any such the loss of which could not reasonably be
expected to result in a Material Adverse Change); and

 

(b)                                 qualify and remain qualified and authorized to do business in each
jurisdiction (including its jurisdiction of incorporation, organization or
formation) in which the character of its properties or the nature of its
business requires such qualification or authorization, except to the extent the
failure to do so could not reasonably be expected to result in a Material
Adverse Change.

 

SECTION 5.2  Business; Compliance with Applicable Law.  Parent and EnergySolutions each will, and
will cause each of their respective Subsidiaries to, (a) engage only in
the Permitted Business and not in any other business activity and (b) comply
with the requirements relating to the Licenses and of all Applicable Laws
except to the extent the failure to so comply could not reasonably be expected
to result in a Material Adverse Change.

 

SECTION 5.3  Maintenance of Properties.  Parent and EnergySolutions each will, and
will cause each of their respective Subsidiaries to, maintain or cause to be
maintained in the ordinary course of business in good working order and
condition (reasonable wear and tear excepted and except for surplus and
obsolete properties and properties damaged from casualty) all properties used
in their respective businesses (whether owned or held under lease) and from
time to time make or cause to be made all needed and appropriate repairs,
renewals, replacements, additions, betterments and improvements thereto except,
in each case, to the extent the failure to do so could not reasonably be
expected to result in a Material Adverse Change.

 

SECTION 5.4  Accounting Methods and Financial Records.  Parent and EnergySolutions each will, and
will cause each of their respective Subsidiaries on a consolidated basis to,
maintain a system of accounting established and administered in accordance with
GAAP, keep adequate records and books of account in which complete entries will
be made in accordance with GAAP and reflecting all transactions required to be
reflected by GAAP and keep accurate and complete records in all material
respects of their respective properties and assets.

 

84

 

SECTION 5.5  Insurance.  Parent and EnergySolutions each will, and
will cause each of their respective Subsidiaries to:

 

(a)                                  Maintain insurance, including public liability coverage insurance with
financially sound and reputable insurance companies in such amounts (and with
no greater risk retention) and against such risks, in each case as is prudent
and not materially inconsistent with past practice (including larceny,
embezzlement, employee fidelity and other criminal misappropriation insurance).

 

(b)                                 Keep their respective assets insured with financially sound and reputable
insurance companies or self-insured against loss or damage by fire, theft,
burglary, pilferage, loss in transit, explosions and hazards insured against by
extended coverage, on terms and in amounts which are customarily maintained by
companies of established repute engaged in the same or similar businesses
operating in the same or similar locations, in accordance with industry
standards, all premiums thereon to be paid by EnergySolutions and each
Subsidiary.

 

(c)                                  Require that each insurance policy for EnergySolutions and the
Subsidiaries provide for at least 30 days’ prior written notice to the
Administrative Agent of any termination of or proposed cancellation or
non-renewal of such policy, or material reduction in coverage, and name, other
than with respect to directors and officers liability insurance coverage, the
Administrative Agent (for itself and for the benefit of the Secured Parties) as
additional named loss payee and additional named insured.

 

SECTION 5.6  Payment of Taxes and Claims.  Parent and EnergySolutions each will, and
will cause each of their respective Subsidiaries to, timely file all tax
returns (including information returns), required by Federal, state or other
tax authorities and pay and discharge all Taxes, including withholding taxes,
assessments and governmental charges or levies required to be paid by them or
imposed upon them or their income or profits or upon any properties belonging
to them, prior to the date on which penalties attach thereto, and all lawful
claims for labor, materials and supplies which, if unpaid, might reasonably be
expected to become a Lien or charge upon any of their properties, except (i) that
no such tax, assessment, charge, levy or claim need be paid where the validity
or amount thereof is being contested in good faith by appropriate proceedings
and for which adequate reserves shall have been set aside on the appropriate
books, but only so long as such contest effectively suspends collection of the
contested obligation and the enforcement of any Lien securing such obligation
and no foreclosure, distraint, sale or similar proceedings shall have been
commenced and (ii) for failures to do so that would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse
Change.

 

SECTION 5.7  Visits and Inspections.  Subject to compliance with any applicable
safety regulations and procedures, Parent and EnergySolutions each will, and
will cause each of their respective Subsidiaries to, permit representatives of
the Administrative Agent and (after making reasonable efforts to consolidate
visits and inspections with those of the Administrative Agent and other
Lenders) any of the Lenders, upon reasonable notice to Parent, EnergySolutions
or the relevant Subsidiary and during normal business hours, to (a) visit
and inspect the properties of Parent, EnergySolutions or such Subsidiary, (b) inspect
and make extracts from and copies of their respective books and records and (c) discuss
with their respective principal officers and independent accountants their
respective businesses, assets, liabilities (including contingent 

 

85

 

liabilities), financial
positions, results of operations and business prospects so long as
EnergySolutions is given reasonable opportunity to be present at such
discussions, all at EnergySolutions’ expense in the case of actions described
in the foregoing clauses (a) through (c) by the Administrative Agent’s
representatives; provided, however, that unless an Event of
Default shall have occurred and be continuing, EnergySolutions shall not be
obligated to reimburse the Administrative Agent for more than one such visit or
inspection per year.

 

SECTION 5.8  Payment of Indebtedness.  Parent and EnergySolutions each will, and
will cause each of their respective Subsidiaries to, pay any and all of their
respective Indebtedness when and as it becomes due, other than amounts disputed
in good faith and for which adequate reserves have been set aside in accordance
with GAAP.

 

SECTION 5.9  Use of Proceeds.  The proceeds of the Term Loans in the amount
of $250,000,000 shall be used to refinance the Indebtedness of EnergySolutions
and Duratek outstanding under the Existing Credit Agreements and proceeds in
the amount of $310,000,000 shall be deposited in the Deposit L/C Escrow Account
for the purpose of cash collateralizing EnergySolutions’ reimbursement
obligations to the Deposit Issuing Banks in respect of Deposit Letters of
Credit.  The proceeds of the Revolving
Loans and drawings under the Revolving Letters of Credit shall be used for
working capital and other general corporate purposes.  Deposit Letters of Credit will replace
synthetic letters of credit issued under the Existing Credit Agreements and will
provide credit support for the obligations of Parent and EnergySolutions under
the Zion Agreements.  No proceeds of the
Loans or drawings under the Letters of Credit hereunder shall be used for the
purchase or carrying or the extension of credit for the purpose of purchasing
or carrying any margin stock within the meaning of Regulations T, U and X of
the Board of Governors of the Federal Reserve System.

 

SECTION 5.10  Real Estate.  Parent and EnergySolutions, each at its sole
cost and expense will, and will cause each of their respective Subsidiaries
(other than Special Purpose Subsidiaries) to, grant a Mortgage to the
Administrative Agent, for itself and for the benefit of the Secured Parties, as
collateral security for the Secured Obligations, and record such Mortgage in
the appropriate recording office, in each case in form and substance reasonably
satisfactory to the Administrative Agent, covering each material fee-owned
parcel of real estate hereafter acquired directly or indirectly by Parent,
EnergySolutions or any of their respective Subsidiaries (other than Special
Purpose Subsidiaries).  Each such
Mortgage shall be granted and recorded, promptly (but in no event more than 30
days) after any such acquisition.  Parent
and EnergySolutions, each at its sole cost and expense will, and will cause
each of their respective Subsidiaries to, deliver to the Administrative Agent
all documentation, including opinions of counsel, flood determinations,
property and liability insurance certificates and Mortgage Policies, which in
the reasonable opinion of the Administrative Agent is appropriate, either in
connection with any request for approval of a proposed Permitted Acquisition or
Real Property Acquisition or thereafter in connection with such grant,
including any survey or any Phase I environmental site assessment requested by
the Administrative Agent or any Lender in form and substance acceptance to such
requesting party.

 

SECTION 5.11  Interest Rate Hedging.  As promptly as practicable, and in any event
within 60 days of the Closing Date, and at the end of each fiscal quarter
thereafter, EnergySolutions shall have in effect (to the extent necessary to
comply with the requirements of 

 

86

 

this sentence) one or
more Hedge Agreements in such aggregate notional amount as shall be necessary
so that no less than 50% of the then outstanding Long-Term Funded Indebtedness
of EnergySolutions shall effectively bear interest at a fixed rate.  Hedge Agreements entered into pursuant to
this Section 5.11 shall provide interest rate protection on terms
(including consideration of the creditworthiness of the counterparty thereto)
reasonably acceptable to the Administrative Agent for an average period of the
lesser of (a) two years from the date of each such Hedge Agreement and (b) the
period remaining from the date thereof until the Term Maturity Date.

 

SECTION 5.12  Covenants Regarding Formation of
Subsidiaries and the Making of Acquisitions.  If any Subsidiary or Domestic DRE is formed
or acquired after the Closing Date, Parent and EnergySolutions will, as
promptly as practicable, and in any event within 30 days (or such longer period
as the Administrative Agent may agree to in writing), (a) notify the
Administrative Agent thereof and cause the Collateral and Guarantee Requirement
to be satisfied with respect to such Subsidiary or Domestic DRE (except if it
is a non-wholly owned Subsidiary if, but only for so long as, as of the end of
and for most recent period of four consecutive fiscal quarters for which
financial statements have been delivered pursuant to Section 6.1 or 6.2
(or, prior to the first delivery of any such financial statements, as of the
end of and for the period of four consecutive fiscal quarters most recently
ended prior to the Closing Date), (1) the consolidated total assets of
such Subsidiary do not exceed $5,000,000 and the consolidated total revenues of
such Subsidiary do not exceed $5,000,000 as of the end of and for such period
and (2) the combined consolidated total assets all Domestic Subsidiaries and
Domestic DREs that are not Subsidiary Guarantors do not exceed $10,000,000 and
the combined consolidated revenues of all such Subsidiaries do not exceed
$10,000,000 of the combined consolidated revenues of Parent and all its
consolidated Subsidiaries as of the end of and for such period) and (ii) any
Equity Interests or Indebtedness of such Subsidiary owned by any Loan Party and
(b) deliver, or cause to be delivered, to the Administrative Agent
documents and opinions in respect of such Subsidiary or Domestic DRE of the
type referred to in paragraphs (b) and (e) of Section 3.1.

 

SECTION 5.13  Deposit Accounts.  Parent and EnergySolutions will cause all
cash owned by Parent, EnergySolutions and their respective Subsidiaries at any
time, other than (i) cash held in non-domestic accounts used in the
operation of Non-U.S. Subsidiaries and (ii) cash in an aggregate amount
not greater than $1,000,000 at any time held in payroll and other local
operating accounts, to be held in deposit accounts maintained in the name of
one or more Loan Parties and will, in each case as promptly as practicable,
notify the Administrative Agent of the existence of any deposit account
maintained by a Loan Party in respect of which a Control Agreement is required
to be in effect pursuant to clause (f) of the definition of the term “Collateral
and Guarantee Requirement” but is not yet in effect.

 

SECTION 5.14  Further Assurances.  Parent, EnergySolutions and each other Loan
Party will execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, fixture filings, mortgages, deeds
of trust and other documents), that may be required under any applicable law,
or that the Administrative Agent may reasonably request, to cause the
Collateral and Guarantee Requirement to be and remain satisfied at all times or
otherwise to effectuate the provisions of the Loan Documents, all at the
expense of the Loan Parties.  Parent and
EnergySolutions will provide to the Administrative Agent, from time to time
upon request, 

 

87

 

evidence reasonably
satisfactory to the Administrative Agent as to the perfection and priority of
the Liens created or intended to be created by the Security Documents.

 

SECTION 5.15  Maintenance of Ratings.  The Loan Parties shall at all times during
the term hereof use commercially reasonable efforts to maintain ratings in
respect of the Loans from S&P and Moody’s.

 

SECTION 5.16  Environmental Compliance.  Except as, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Change, Parent
and EnergySolutions each will, and will cause each of their respective
Subsidiaries to:

 

(a)                                  comply with all Environmental Laws and Environmental Permits now or
hereafter applicable to the Property or the Permitted Business at its own cost
and expense (including legal, consultant and other professional fees and
expenses and costs of investigation);

 

(b)                                 obtain and maintain in full force and effect all Environmental Permits
required under applicable Environmental Law for the operation of the Permitted
Business;

 

(c)                                  conduct and complete, at its sole cost and expense, any investigation,
study, sampling, monitoring or testing (collectively, “Environmental Testing”)
and undertake any investigation, cleanup, removal, remedial, corrective,
mitigation, response, monitoring or any other activity (collectively, “Environmental
Cleanup Activities”) required by any applicable Governmental Authority or
Environmental Law, or by contract, with respect to Hazardous Materials at, in,
on, under or from the Property, or any other real property for which Parent,
EnergySolutions or any of their respective Subsidiaries has assumed, by law,
contract or otherwise, responsibility for such Environmental Testing or
Environmental Cleanup Activities, and any such Environmental Testing or
Environmental Cleanup Activities shall be undertaken with appropriate diligence
and in full compliance with all applicable Environmental Laws;

 

(d)                                 provide as promptly as practicable (and in any event within 20 days of
receipt thereof) to the Administrative Agent written notice of and copies of
all written nonprivileged and material communications relating to (i) any
pending or threatened claim or investigation with respect to any Environmental
Liability pertaining to the Property, or the use or operation thereof, of
Parent, EnergySolutions and their respective Subsidiaries or the Permitted
Business or (ii) any fact, condition, event or other circumstance with
respect to the Property or any other facility or property presently or formerly
owned, leased, operated or undergoing closure, post-closure or decommissioning
activities by Parent, EnergySolutions, any of their respective Subsidiaries or
any Person for which Parent, EnergySolutions or any such Subsidiary is
responsible, which is reasonably likely to result in a material claim with
respect to any Environmental Liability pertaining to the Property, Parent,
EnergySolutions or any such Subsidiary; all such notices shall describe in
reasonable detail the nature of the claim, investigation, fact, condition,
event or other circumstance and Parent’s, EnergySolutions’ or such Subsidiary’s
response thereto;

 

(e)                                  at any time, Parent or EnergySolutions receives notice that an adverse
change in the environmental condition of the Property has occurred or an
adverse environmental condition with respect to the Property has been
discovered, and at EnergySolutions’ or Parent’s sole cost and expense, (i) diligently
commence (or cause another Person to commence) to cure such 

 

88

 

condition, to the extent
required by applicable Environmental Laws (including commencing any evaluation
or assessment of such conditions and the development of an appropriate plan
with respect thereto), within 30 days after receipt of such notice (or such
shorter period as may be required by applicable Environmental Laws or in the
event of an emergency) and (ii) thereafter diligently prosecute (or cause
another Person to diligently prosecute) such cure to completion; and

 

(f)                                    Parent and EnergySolutions shall provide to the Administrative Agent such
detailed reports relating to any material claim with respect to any
Environmental Liability as may reasonably be requested by the Administrative
Agent or the Lenders.

 

SECTION 5.17  Certain Post-Closing Collateral
Obligations.  As promptly as
practicable, and in any event within the time periods after the Closing Date
specified in Schedule 5.17 or such later date as the Administrative Agent
agrees to in writing, Parent, EnergySolutions and each other Loan Party will
deliver the documents and take the actions specified on Schedule 5.17 that
would have been required to be delivered or taken on or prior to the Closing
Date but for the penultimate sentence of Section 3.1, in each case except
to the extent otherwise agreed by the Administrative Agent pursuant to its
authority as set forth in the definition of the term “Collateral and Guarantee
Requirement”.

 

ARTICLE VI

 

Information
Covenants

 

So
long as any of the Obligations shall be outstanding and unpaid, any Letter of
Credit shall be outstanding, any L/C Disbursement shall be unreimbursed or
EnergySolutions shall have the right to borrow or request the issuance,
amendment, renewal or extension of any Letter of Credit hereunder (whether or
not the conditions to any such credit extension have been or can be fulfilled),
and unless the Majority Lenders, or such greater number or percentage of
Lenders as may be expressly provided herein, shall otherwise consent in
writing, EnergySolutions shall furnish or cause to be furnished to each Lender
and the Administrative Agent, at their respective offices:

 

SECTION 6.1  Quarterly Statements and Information.  Within 45 days after the last day of each of
the first three quarters of each fiscal year of Parent (or, so long as Parent
shall be subject to periodic reporting obligations under the Exchange Act, by
the date five days after the date that the Quarterly Report on Form 10-Q
of Parent for such fiscal quarter would be required to be filed under the rules and
regulations of the SEC, giving effect to any automatic extension available
thereunder for the filing of such form), the unaudited consolidated balance
sheet of Parent on a consolidated basis with all of its Subsidiaries, as at the
end of such quarter and as at the end of the preceding fiscal year, and the
related statements of income and cash flows of Parent on a consolidated basis
with all of its Subsidiaries, for such fiscal quarter and for the then elapsed
portion of the fiscal year, which, in the case of such consolidated statement
of income, shall set forth in comparative form such figures as at the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year and
the corresponding prior period or periods (but only for any such prior period
for which such comparative figures are available), and shall be certified by a
Financial Officer of Parent to be, in his or her opinion, complete and correct
in all material 

 

89

 

respects and to present
fairly, in accordance with GAAP for interim financial statements, the financial
position of Parent on a consolidated basis with all of its Subsidiaries as at
the end of such fiscal quarter and the results of operations for such fiscal
quarter, and for the then elapsed portion of the fiscal year, subject only to
normal year-end adjustments.

 

SECTION 6.2  Annual Financial Statements and
Information.  Within 120 days after
the end of each fiscal year of Parent (or, so long as Parent shall be subject
to periodic reporting obligations under the Exchange Act, by the date five days
after the date that the Annual Report on Form 10-K of Parent for such
fiscal year would be required to be filed under the rules and regulations
of the SEC, giving effect to any automatic extension available thereunder for
the filing of such form), (a) the audited consolidated balance sheet of Parent
on a consolidated basis with all of its Subsidiaries, as of the end of such
fiscal year, (b) the related audited consolidated statements of income for
such fiscal year and, to the extent available and not previously provided to
the Administrative Agent, for the previous two fiscal years, (c) the
related audited consolidated statements of changes in shareholders’ equity for
such fiscal year and, to the extent available and not previously provided to
the Administrative Agent, for the previous two fiscal years and (d) the
related audited consolidated statements of cash flows for such fiscal year and,
to the extent available and not previously provided to the Administrative
Agent, for the previous two fiscal years, which shall all be accompanied by an
opinion (without a “going concern” or like qualification or exception and
without any qualification or exception as to the scope of such audit) of Ernst &
Young LLP or other independent registered public accounting firm of recognized
national standing or otherwise reasonably acceptable to the Administrative
Agent, together with a statement of such accountants to the effect that such
consolidated financial statements present fairly, in all material respects, the
results of operations and cash flows of Parent and its consolidated
Subsidiaries on a consolidated basis as of the end and for such year in
accordance with GAAP and that in connection with their audit, they did not
obtain knowledge during the course of their examination that caused them to
believe that Parent was not in compliance with the terms, covenants, provisions
or conditions of Section 7.6.

 

SECTION 6.3  Performance Certificates.  Each time annual or quarterly financial
statements are furnished pursuant to Section 6.1 or 6.2, a Performance
Certificate signed by a Financial Officer of Parent and EnergySolutions:

 

(a)                                  stating, as at the end of such fiscal quarter or fiscal year, as the case
may be, whether or not Parent and its Subsidiaries, on a consolidated basis,
were in compliance with the requirements of Sections 7.6 and 7.15 and setting
forth reasonably detailed calculations in support thereof;

 

(b)                                 stating that, to his or her knowledge, no Default or Event of Default has
occurred as at the end of such fiscal quarter or fiscal year, as the case may
be, or if a Default or an Event of Default has occurred, disclosing each such
Default or Event of Default and its nature, when it occurred, whether it is
continuing and the steps being taken by EnergySolutions with respect thereto;

 

(c)                                  stating whether any change in GAAP or in the application thereof has
occurred since the date of the consolidated balance sheet of Parent most
recently theretofore delivered under Section 6.1 or 6.2 (or, prior to the
first such delivery, referred to in Section 4.11) and, if

 

90

 

any such change has
occurred, specifying the effect of such change on the financial statements
(including those for the prior periods) accompanying such certificate;

 

(d)                                 certifying that all reports, notices, certificates and other documents
required to be provided under Sections 6.4 and 6.5 have been provided in
accordance with such Sections; and

 

(e)                                  in the case of such annual financial statements being furnished pursuant
to Section 6.2 for a fiscal year ended on or after December 31, 2010,
setting forth a reasonably detailed calculation of Excess Cash Flow for such
fiscal year and Available Excess Cash Flow as of the end of such fiscal year
(or, in the case of the fiscal year ending on December 31, 2010, for and as of
the last day of the partial year commencing on October 1, 2010 and ending on
December 31, 2010).

 

SECTION
6.4  Other Reports and Notices.  (a)  Promptly upon receipt thereof,
copies of any final letters submitted to the Audit Committee (or equivalent
committee) of the Board of Directors of Parent or EnergySolutions by its
independent public accountants, reporting significant deficiencies or material
weaknesses in internal controls over financial reporting.

 

(b)                                 Promptly upon receipt thereof, copies of any material notice or report
regarding any License held by Parent, EnergySolutions or any of their
respective Subsidiaries, the loss of which could reasonably be expected to
result in a Material Adverse Change.

 

(c)                                  In connection with any proposed Acquisition by EnergySolutions or any of
its Subsidiaries described in Section 7.5(d)(ii), or any proposed Real
Property Acquisition, and promptly upon each request, such data, certificates,
reports, statements, opinions of counsel prepared for the Administrative Agent
and the Lenders, or any of them, documents or further information regarding the
business, assets, liabilities, financial position, projections, results of
operations or business prospects of EnergySolutions or any of its Subsidiaries
as the Administrative Agent or any Lender may reasonably request, including a
Phase I environmental site assessment in connection with any proposed Real
Property Acquisition.

 

(d)                                 Annually, a certificate of insurance indicating that the requirements of
Section 5.5 remain satisfied for such fiscal year.

 

(e)                                  Annually, and in no event later than February 28 of any year, a copy of
Parent’s annual budget for itself and its Subsidiaries, on a consolidated
basis, for such fiscal year (including a projected consolidated statement of
income for such fiscal year and setting forth the assumptions used for purposes
of preparing such budget with such level of detail as is consistent with the
assumptions contained in the Confidential Information Memorandum delivered to
the Lenders prior to the Closing Date) and, promptly after the same become
available, any significant revisions approved by the Board of Directors of
Parent to such budget.

 

(f)                                    Promptly upon receipt thereof, notice of any casualty or other insured
damage to any material portion of any Collateral or the commencement of any
action or proceeding for the taking or expropriation of any material portion of
any Collateral or interest therein under power of eminent domain or by
condemnation or similar proceeding.

 

91

 

(g)                                 Within 90 days after the end of each fiscal year of Parent, a
certificate of an Authorized Signatory of each of Parent and EnergySolutions
setting forth (i) all Equity Interests or Indebtedness owned by any Loan
Party, (ii) all intellectual property registered or the subject of an
application for registration by any Loan Party, (iii) all commercial tort
claims in respect of which a complaint or a counterclaim has been filed by any
Loan Party and that, in each case, (A) if so owned or filed by a Loan Party
as of the Closing Date would have been required to be set forth on the
applicable schedule to the Guarantee and Collateral Agreement pursuant to the
terms of such agreement and (B) have not been set forth on such schedule
or on a certificate previously delivered pursuant to this clause and (iv) the
information required pursuant to the Perfection Certificate or certifying that
there has been no change in such information since the date of the Perfection
Certificate delivered on the Closing Date or the date of the most recent
certificate delivered pursuant to this Section 6.4(g).

 

(h)                                 Prompt written notice of any change in (i) the legal name of any Loan
Party, as set forth in its organizational documents, (ii) the jurisdiction of
organization or the form of organization of any Loan Party (including as a
result of any merger or consolidation), (iii) the location of the chief
executive office of any Loan Party or (iv) the organizational identification
number, if any, or, with respect to any Loan Party organized under the laws of
a jurisdiction that requires such information to be set forth on the face of a
Uniform Commercial Code financing statement, the Federal Taxpayer
Identification Number of such Loan Party.

 

(i)                                     Prompt written notice of (i) the acquisition by any Loan Party of, or any
real property or leasehold interest otherwise becoming, a Mortgaged Property
after the Closing Date and (ii) the acquisition by any Loan Party of any other
assets after the Closing Date, the value of which is equal to or greater than
$1,000,000 individually or in the aggregate, other than any assets constituting
Collateral under the Security Documents in which the Administrative Agent shall
have a valid, legal and perfected security interest (with the priority
contemplated by the applicable Security Document) upon the acquisition thereof.

 

(j)                                     Within 45 days after the last day of each fiscal quarter of Parent,
financial and operations status reports relating to the Zion Acquisition and
EnergySolutions’ decommissioning obligations related thereto, in a form as
agreed to by the Administrative Agent and EnergySolutions.

 

(k)                                  Annually, and in no event later than February 28 of any year, fund
reports created for EnergySolutions by any trustee in connection with the Zion
Acquisition or pursuant to the Zion Agreements; provided that such
reports include (i) fund performance, (ii) beginning and end of year allocation
mix, (iii) beginning and end of year net asset value and (iv) a summary of the
investment policy.

 

(l)                                     Promptly after the same become publicly available, copies of all periodic
reports, proxy statements and registration statements (other than on Form S-8)
filed by Parent, EnergySolutions or any of their respective Subsidiaries with
the SEC or with any national securities exchange.  Information required to be delivered pursuant
to this clause (l) shall be deemed to have been delivered if such information,
or one or more annual or quarterly reports containing such information, shall
be available on the website of the SEC at http://www.sec.gov.

 

92

 

(m)                               Promptly after any request therefor, such other information regarding the
operations, business affairs, assets, liabilities (including contingent
liabilities) and financial condition of Parent, EnergySolutions or any of their
respective Subsidiaries, or compliance with the terms of any Loan Document, as
the Administrative Agent or any Lender may reasonably request.

 

Information required to be delivered pursuant to
this Section may also be delivered by electronic communications pursuant to
procedures approved by the Administrative Agent.

 

SECTION
6.5  Notice of Litigation and Other
Matters.  Notice specifying the
nature and status of all of the following events, promptly, but in any event
not later than 15 days after any officer or manager of Parent or
EnergySolutions becomes aware of the occurrence of any such event:

 

(a)                                  the occurrence of, or receipt by Parent or EnergySolutions of any written
notice claiming the occurrence of, any Default;

 

(b)                                 the commencement of all proceedings and investigations by or before any
Governmental Authority and all actions and proceedings in any court or before
any arbitrator against, or to the extent known to EnergySolutions or Parent, in
any other way relating adversely to, Parent, EnergySolutions or any of their
respective Subsidiaries, or any of their respective properties, assets or
businesses or any License that have resulted or could reasonably be expected to
result in a Material Adverse Change;

 

(c)                                  any change with respect to the business, assets, liabilities, financial
position, results of operations or business prospects of Parent,
EnergySolutions or any of their respective Subsidiaries that has resulted or
could reasonably be expected to result in a Material Adverse Change;

 

(d)                                 the occurrence or non-occurrence of any event (i) that constitutes, or
that with the passage of time or giving of notice or both would constitute, a
material default by Parent, EnergySolutions or any of their respective Subsidiaries
under any material agreement other than this Agreement to which Parent,
EnergySolutions or any of their respective Subsidiaries is a party or by which
any of their respective properties may be bound or (ii) that could reasonably
be expected to result in a Material Adverse Change, giving in each case the
details thereof and specifying the action proposed to be taken with respect
thereto;

 

(e)                                  (i) the occurrence of a “prohibited transaction” (as such term is defined
in Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan
that would result in the imposition on Parent, EnergySolutions or any of their
respective Subsidiaries of a tax or penalty, (ii) any Reportable Event (for
which the 30-day notice requirement has not been waived) with respect to any
Plan, (iii) any failure by any Plan to meet the minimum funding standards
within the meaning of Section 412 of the Code or Section 302 of
ERISA, (iv) the institution or, to the knowledge of Parent, EnergySolutions or
any of their respective Subsidiaries, threatened institution by the PBGC of
proceedings under ERISA to terminate or to partially terminate any Plan or
ERISA Affiliate Plan or appoint a trustee to administer any such Plan or (v)
the commencement of or, to the knowledge of Parent, EnergySolutions or any of
their respective 

 

93

 

Subsidiaries, threatened
commencement of any litigation regarding any such Plan, in each case, that
could, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Change; and

 

(f)                                    the occurrence of any event subsequent to the Closing Date which, if such
event had occurred prior to the Closing Date, would have constituted an
exception to the representation and warranty in Section 4.13.

 

Information required to be delivered pursuant to
this Section may also be delivered by electronic communications pursuant to
procedures approved by the Administrative Agent.

 

ARTICLE
VII

 

Negative
Covenants

 

So
long as any of the Obligations shall be outstanding and unpaid, any Letter of
Credit shall be outstanding, any L/C Disbursement shall be unreimbursed or
EnergySolutions shall have the right to borrow or request the issuance,
amendment, renewal or extension of any Letter of Credit hereunder (whether or
not the conditions to borrowing have been or can be fulfilled), and unless the
Majority Lenders, or such greater number or percentage of Lenders as may be
expressly provided herein, shall otherwise consent in writing:

 

SECTION
7.1  Limitation on Indebtedness;
Derivative Contracts.  Parent and
EnergySolutions each shall not, and shall not permit any of their respective
Subsidiaries to, create, assume, incur or otherwise become or remain obligated
in respect of, or permit to be outstanding, any Indebtedness, or enter into any
Derivative Contract, except:

 

(a)                                  the Obligations (other than Loans made pursuant to Section 2.18);

 

(b)                                 current accounts payable, accrued expenses, customer advance payment
liabilities in connection with FASB 143 and liabilities that are related to
litigation, in each case, incurred in, or resulting from the conduct of, the
ordinary course of the Permitted Business;

 

(c)                                  Indebtedness secured by Permitted Liens described in clauses (g) and (h)
of the definition of the term “Permitted Liens”;

 

(d)                                 Obligations under (i) the Secured Hedge Agreements, (ii) Hedge Agreements
entered into pursuant to Section 5.11 and (ii) Derivative Contracts permitted
under Section 7.12;

 

(e)                                  Guarantees expressly permitted under Section 7.5;

 

(f)                                    Indebtedness, including the Senior Notes, existing as of the Closing Date
and listed on Schedule 7.1 and Refinancing Indebtedness in respect
thereof;

 

(g)                                 Indebtedness of EnergySolutions and its Subsidiaries (other than
Indebtedness of the type acquired or assumed in accordance with
Section 7.1(l)) evidenced by Capitalized Lease Obligations or purchase
money Indebtedness in an aggregate principal amount not to exceed $40,000,000
at any time outstanding;

 

94

 

(h)                                 so long as no Default or Event of Default has occurred and is continuing
or would result therefrom, Additional Permitted Debt to the extent that (i)
such Additional Permitted Debt is issued to the seller as all or part of the
consideration for any Permitted Acquisition or Real Property Acquisition or
(ii) the Net Proceeds thereof are used within 90 days after the date of
issuance thereof to finance all or a part of any Permitted Acquisition or Real
Property Acquisition (including to refinance any Indebtedness of either the
Acquisition Entity or the business acquired) and to pay the related fees and
expenses; provided that (x) the sum of (1) the aggregate principal
amount of all Additional Permitted Debt incurred pursuant to this
Section 7.1(h) and (2) the aggregate principal amount of all
Indebtedness incurred pursuant to Section 7.1(i) shall not exceed
$25,000,000 at any time outstanding and (y) if all or any portion of the Net
Proceeds of such Additional Permitted Debt are not so used within such 90-day
period (or such earlier date, if any, as EnergySolutions determines not to (or
that it cannot) consummate a Permitted Acquisition within such 90-day period),
such remaining portion shall be repaid to the extent not prohibited by the
terms thereof, and to the extent not so repaid, an amount equal to such
remaining portion shall be applied by EnergySolutions on the last day of such
period (or such earlier date of determination, if any) as a prepayment of Term
Loans in accordance with Section 2.10(b);

 

(i)                                     Indebtedness of a Subsidiary acquired pursuant to a Permitted Acquisition
(or Indebtedness assumed at the time of a Permitted Acquisition of an asset
securing such Indebtedness) or Real Property Acquisition (provided that
(x) such Indebtedness was not incurred in connection with, or in anticipation
or contemplation of, such Permitted Acquisition or Real Property Acquisition
and (y) such Indebtedness does not constitute Indebtedness for Money Borrowed,
it being understood and agreed that Capitalized Lease Obligations and purchase
money Indebtedness shall not constitute Indebtedness for Money Borrowed for
purposes of this clause (y)) and Refinancing Indebtedness in respect of
Indebtedness initially incurred under this Section 7.1(i); provided that
the aggregate principal amount of all Indebtedness permitted by this
Section 7.1(i) (including any such Refinancing Indebtedness) shall not
exceed at any time outstanding the aggregate principal amount which, when added
to the aggregate principal amount of all Indebtedness then outstanding pursuant
to Section 7.1(h), equals $25,000,000;

 

(j)                                     so long as no Default or Event of Default has occurred and is continuing
or would result therefrom, Indebtedness incurred by EnergySolutions and its
Subsidiaries for the purpose of providing cash collateral or letters of credit
to secure performance bonds and/or fidelity bonds required to be furnished in
connection with service contracts entered into by EnergySolutions or its
Subsidiaries in the ordinary course of the Permitted Business in an aggregate
principal amount not to exceed $5,000,000 at any time outstanding, provided
that no more than $2,500,000 of such Indebtedness may be secured by a Lien on
the property of EnergySolutions and its Subsidiaries;

 

(k)                                  Indebtedness of any Subsidiary to Parent, EnergySolutions or any other
Subsidiary; provided that (i) such Indebtedness shall not have been
transferred to any Person other than Parent, EnergySolutions or any other
Subsidiary, (ii) any such Indebtedness owing by any Loan Party shall be
subordinated to the Obligations pursuant to a Subordination Agreement, (iii)
any such Indebtedness owing to any Loan Party shall be evidenced by a
promissory note that shall have been pledged pursuant to the Administrative
Agreement and (iv) any such Indebtedness owing by any Subsidiary that is not a
Loan Party to any Loan Party shall be incurred in compliance with Section 7.5;

 

95

 

(l)                                     reimbursement and other obligations of EnergySolutions or its Subsidiaries
in connection with performance bonds and/or fidelity bonds that are (i)
unsecured or (ii) secured only by (A) cash proceeds of Revolving Loans or by
Letters of Credit issued hereunder or (B) cash proceeds from Indebtedness or
letters of credit incurred pursuant to clause (j) above, which bonds are
required to be furnished by EnergySolutions or any of its Subsidiaries in
connection with service contracts entered into by EnergySolutions or such
Subsidiaries in the ordinary course of the Permitted Business;

 

(m)                               Guarantees by EnergySolutions or any Subsidiary Guarantor in respect of
any Indebtedness of EnergySolutions or any Subsidiary Guarantor, in each case
otherwise permitted by this Section 7.1 (other than Additional Permitted Debt,
except to the extent permitted to be guaranteed in accordance with the
definition of the term “Additional Permitted Debt”);

 

(n)                                 Indebtedness owed in respect of any overdrafts and related liabilities
arising from treasury, depository and cash management services or in connection
with any automated clearing-house transfers of funds; provided that such
Indebtedness shall be repaid in full within five Business Days of the
incurrence thereof;

 

(o)                                 Indebtedness incurred pursuant to Section 2.18; provided that the
proceeds of such Indebtedness shall not be used to make any Restricted Payments
or any Restricted Debt Payments;

 

(p)                                 Indebtedness incurred by Non-U.S. Subsidiaries in an aggregate amount not
to exceed, at the time any such Indebtedness is incurred, the greater of (i)
$15,000,000 and (ii) an amount equal to 15% of the combined total assets
of all Non-U.S. Subsidiaries as of the last day of the most recent fiscal
quarter for which financial statements have been provided pursuant to
Section 6.1 or 6.2;

 

(q)                                 Indebtedness under a UK working capital facility in an aggregate
principal amount not to exceed $40,000,000 at any time outstanding, provided
that such facility shall be used solely to provide working capital to support
the performance by EnergySolutions or its Subsidiaries under contracts with the
UK Governmental Authorities and any drawings under such facility are limited to
amounts anticipated to be repaid with revenues under such contracts;

 

(r)                                    Indebtedness of any Special Purpose Subsidiary other than ZionSolutions
not to exceed $10,000,000 per such Special Purpose Subsidiary;

 

(s)                                  Indebtedness arising from unsecured obligations of EnergySolutions or
Parent pursuant to documents identified in clauses (b), (h) and (l) in the
definition of the term “Zion Agreements”;

 

(t)                                    Indebtedness arising from unsecured obligations of EnergySolutions or
Parent pursuant to any SPS Project Documentation (other than the Zion
Agreements), including any guarantee bond; provided that the aggregate
amount of such obligations shall not exceed $50,000,000 per Special Purpose
Subsidiary (other than Zion Solutions) at any time; provided  further
that the aggregate amount of all such obligations shall not exceed $150,000,000
at any time;

 

96

 

(u)                                 other Additional Permitted Debt issued for cash, provided that
(i) the Applicable Section 7.1(u) Prepayment Percentage of the Net
Proceeds thereof is applied, notwithstanding anything else contained herein,
(i) first, to prepay amounts outstanding under the Term Loans until the
Term Loans are repaid in full and, second, to prepay any outstanding
Revolving Loans (it being understood that this proviso shall not apply to
Refinancing Indebtedness in respect of Indebtedness initially incurred under
this Section 7.1(u)) and (ii) after giving effect to the incurrence of
such Additional Permitted Debt and the use of proceeds therefrom, the covenants
in Section 7.6 would have been satisfied on a pro forma basis as of the
last day of the most recently ended fiscal quarter at the end of which
financial statements were required to have been delivered pursuant to
Section 6.1 or 6.2 (the “Latest Financial Reporting Date”), and
Refinancing Indebtedness in respect of such Additional Permitted Debt.

 

SECTION
7.2  Limitation on Liens.  Parent and EnergySolutions each shall not,
and shall not permit any of their Subsidiaries to, create, assume, incur or
permit to exist any Lien on any of its properties or assets, whether now owned
or hereafter acquired, except for Permitted Liens.

 

SECTION
7.3  Amendment of Material Documents.  Parent and EnergySolutions each shall not,
and shall not permit any of their respective Subsidiaries to, (a) enter into
any amendment of its articles or certificate of incorporation, certificate of
formation, by-laws, operating agreement, partnership agreement or comparable
organizational document, except in each case to the extent that such amendment
is not materially adverse to the interests of the Lenders or (b) amend, modify
or waive any of its rights under the Senior Notes Documents or any agreement or
instrument governing or evidencing any Indebtedness in an aggregate principal
amount of $10,000,000 or more, except in each case to the extent that such
amendment, modification or waiver (i) is not materially adverse to the
interests of the Lenders or (ii) is permitted by the definition of the term “Refinancing
Indebtedness”; it being understood and agreed, in each case, that any such
amendment, modification or waiver that restricts the ability of Parent or any
of its Subsidiaries to provide credit support in respect of the Secured
Obligations (including pursuant to the provision of Guarantees or the grant of
Liens) shall be deemed to be materially adverse to the interests of the
Lenders.

 

SECTION
7.4  Liquidation, Merger,
Consolidation, Disposition of Assets. 
(a)  Disposition of Assets.  Parent and EnergySolutions each shall not,
and shall not permit any of their respective Subsidiaries to, at any time sell,
lease, license, abandon, transfer, assign or otherwise dispose of any of their
assets, including any Equity Interest owned by it but excluding any Excluded
Asset Sales, unless (i) any Net Proceeds therefrom are applied as provided in
Section 2.11(b), (ii) any such sale, lease, license or disposition resulting
in Net Proceeds in excess of $2,500,000 is made for fair market value as
determined in good faith by the managers or board of directors of
EnergySolutions, (iii) at least 75% of the consideration received consists of
cash or readily marketable cash equivalents or the assumption of Indebtedness
of EnergySolutions or any Subsidiary and no Default then exists or would be
caused thereby and (iv) as to any such sale, lease, license or other
disposition where the aggregate consideration to be received is in excess of
$20,000,000, the Majority Lenders shall have given their express prior written
consent, after receiving such information and documents as the Administrative
Agent or any Lender may request.  At the
time of any such Permitted Asset Sale hereunder in which the aggregate
consideration therefor exceeds $10,000,000, EnergySolutions shall provide the
Administrative Agent and the Lenders with projections assuming the consummation
of the 

 

97

 

Permitted Asset Sale and
demonstrating pro forma compliance with Section 7.6 for the remaining term
of this Agreement.

 

(b)                                 Liquidation, Merger or Consolidation.  Parent and EnergySolutions each shall not,
and shall not permit any of their respective Subsidiaries (other than any
Special Purpose Subsidiary) to, at any time liquidate or dissolve (or suffer
any liquidation or dissolution) or otherwise wind up, or enter into any merger
or consolidation; provided that if no Default then exists or would
result therefrom, the following transactions are permitted:  (i) a merger or consolidation among
EnergySolutions and one or more of its Subsidiaries that is a wholly-owned
Subsidiary Guarantor, provided that EnergySolutions is the surviving
Person; (ii) a merger or consolidation between or among two or more
Subsidiaries, provided that if any of the entities is a Subsidiary
Guarantor, the surviving entity shall be a Subsidiary Guarantor; (iii) subject
to clauses (i) and (ii) above, an Acquisition permitted hereunder effected by a
merger or consolidation in which EnergySolutions, a Subsidiary or an entity
that becomes a Subsidiary is the surviving Person; (iv) a liquidation or
dissolution of one or more Subsidiaries into its or their parent entity, provided
that EnergySolutions or one of its Subsidiaries (other than any Special Purpose
Subsidiary is such parent entity; and (v) any transaction or series of related
transactions whereby EnergySolutions becomes a corporation organized under the
laws of the State of Delaware or the State of Utah, so long as, following such
transaction or transactions, no Person other than Parent has an economic or
voting interest in EnergySolutions, provided that at least 10 days prior
to executing any transaction or transactions permitted by clause (v) of this Section 7.4(b),
EnergySolutions shall provide written notice to the Administrative Agent and
shall execute any amendment to the Loan Documents reasonably requested by the
Administrative Agent so that the Collateral and Guarantee Requirement shall be
and remain satisfied.  Notwithstanding
anything to the contrary in any Loan Document (other than this Agreement), any
reorganization permitted pursuant to clause (v) of this Section 7.4(b)
shall be deemed not to be a breach of any representation or warranty in any
Loan Document, so long as EnergySolutions complies with the notification and
documentation requirements in such clause (v). 
Notwithstanding anything to the contrary contained above,
EnergySolutions must at all times be a wholly owned Subsidiary of Parent.

 

SECTION
7.5  Investments and Acquisitions.  Parent and EnergySolutions each shall not,
and shall not permit any of their respective Subsidiaries to, make any
Investment in any Person, or make any Acquisition or Real Property Acquisition,
except that so long as no Default exists before and after giving effect
thereto:

 

(a)                                  Cash Equivalents.  Parent, EnergySolutions and each of their
respective Subsidiaries may, directly or through a brokerage account, purchase
(i) marketable direct obligations of the United States of America, its agencies
and instrumentalities maturing within one year from the date of acquisition
thereof, (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody’s, (iii) dollar-denominated time
deposits, certificates of deposit and bankers’ acceptances of any Lender or any
commercial bank having, or which is the principal banking subsidiary of a bank
holding company having, a long-term unsecured debt rating of at least “A” or
the equivalent thereof from S&P or “A2” or the equivalent thereof from
Moody’s with maturities of 

 

98

 

not more than one year
from the date of acquisition by such Person, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the type
described in clauses (i) and (ii) above entered into with any bank meeting the
qualifications specified in clause (iii) above, (v) commercial paper issued by
any Person incorporated in the United States of America rated at least “A-1” or
the equivalent thereof by S&P or at least “P-1” or the equivalent thereof
by Moody’s and in each case maturing not more than one year after the date of
acquisition by such Person; (vi) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in clauses (i) through (v) above; and (vii) overnight investments of
excess balances in commercial checking accounts with a commercial bank that (x)
is organized under the laws of the United States of America, any State thereof
or the District of Columbia or is the principal banking subsidiary of a bank
holding company organized under the laws of the United States of America, any
State thereof or the District of Columbia, (y) is a member of the Federal
Reserve System and is insured by the Federal Deposit Insurance Corporation and
(z) is a Revolving Lender hereunder (collectively, “Cash Equivalents”).

 

(b)                                 Acquisitions.  Subject to compliance with
Section 7.5(d), EnergySolutions and its Subsidiaries may make Permitted
Acquisitions and Real Property Acquisitions.

 

(c)                                  Investments.  Subject to compliance with
Section 7.5(d), Parent, EnergySolutions and their respective Subsidiaries
may make the following Investments (collectively, “Permitted Investments”):

 

(i)                                     EnergySolutions and its Subsidiaries may acquire and hold accounts
receivable owing to any of them, if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary trade
terms of EnergySolutions or such Subsidiaries;

 

(ii)                                  EnergySolutions and its Subsidiaries may acquire and own Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of their customers and suppliers or in good faith settlement of
delinquent obligations of, and other disputes with, their customers and
suppliers arising in the ordinary course of business;

 

(iii)                               Parent, EnergySolutions and their respective Subsidiaries may make
Investments consisting of loans and advances to officers and employees for
moving, relocation and travel expenses and other similar expenditures, in each
case in the ordinary course of business and in an aggregate amount not to
exceed $1,000,000 at any time outstanding (determined without regard to any
write-downs or write-offs of such loans and advances);

 

(iv)                              EnergySolutions and its Subsidiaries may acquire and hold promissory
notes and other non-cash consideration issued by the purchaser of assets in
connection with a sale of such assets to the extent permitted by the definition
of the term “Permitted Asset Sale”;

 

99

 

(v)                                 Parent, EnergySolutions and their respective Subsidiaries may enter into
(i) Secured Hedge Agreements, (ii) Hedge Agreements required under Section 5.11
and (ii) Derivative Contracts permitted under Section 7.12;

 

(vi)                              investments by Parent, EnergySolutions and their respective Subsidiaries
in Equity Interests in their subsidiaries; provided that (x) such
subsidiaries are Subsidiaries prior to such investments, (y) any such Equity
Interests held by a Loan Party shall be pledged in accordance with the
requirements of the definition of the term “Collateral and Guarantee
Requirement” and (z) the aggregate amount of such investments by Loan Parties in,
and loans and advances by Loan Parties to, and Guarantees by Loan Parties of
Indebtedness and other obligations of, Subsidiaries that are not Loan Parties
(excluding all such investments, loans, advances and Guarantees existing on the
date hereof and permitted by clause (xii)) and of investments in joint ventures
shall not exceed $60,000,000 at any time outstanding;

 

(vii)                           loans or advances made by Parent, EnergySolutions or any of their
respective Subsidiaries to any Subsidiary; provided that (x) the Indebtedness
resulting therefrom is permitted by Section 7.1(k) and (y) the amount of such
loans and advances made by Loan Parties to Subsidiaries that are not Loan
Parties shall be subject to the limitation set forth in clause (vi) above;

 

(viii)                        Guarantees by Parent, EnergySolutions or any of their respective
Subsidiaries of Indebtedness (other than Additional Permitted Debt, except to
the extent permitted to be guaranteed in accordance with the definition of the
term “Additional Permitted Debt”) or other obligations of Parent,
EnergySolutions or any of their Subsidiaries (including any such Guarantees
arising as a result of any such Person being a joint and several co-applicant
with respect to any Letter of Credit or any other letter of credit or letter of
guaranty); provided that (x) a Subsidiary that has not Guaranteed the
Secured Obligations pursuant to the Guarantee and Collateral Agreement shall
not guarantee any Indebtedness or other obligations of any Loan Party, (y)
Parent shall not guarantee any Indebtedness or other obligation of any
Subsidiary except for any such Guarantees under the Loan Documents and (z) the
aggregate amount of Indebtedness and other obligations of Subsidiaries that are
not Loan Parties that is Guaranteed by any Loan Party shall be subject to the
limitation set forth in clause (vi) above;

 

(ix)                                Investments by Parent, EnergySolutions and their respective Subsidiaries
in joint ventures; provided that the amount of such investments shall be
subject to the limitation set forth in clause (vi) above;

 

(x)                                   Investments which at the time made are in amount not in excess of
Available Excess Cash Flow immediately prior to such time and the amount of
which reduces such Available Excess Cash Flow;

 

(xi)                                Guarantees of obligations of any Loan Party relating to and entered into
in the ordinary course of the Permitted Business;

 

100

 

(xii)          Investments
outstanding as of the Closing Date and set forth on Schedule 7.5;

 

(xiii)         Investments
in ZionSolutions pursuant to the Zion Agreements in an aggregate amount not
greater than the aggregate amount of Investments to be made pursuant to the
Zion Agreements in the forms most recently delivered to the Administrative
Agent prior to the date hereof (without, for the avoidance of doubt, giving
effect to any other amendments or modifications thereof pursuant to clause (o) of
the definition of the term “Zion Agreements”);

 

(xiv)                         Investments by EnergySolutions and its Subsidiaries in Special Purpose
Subsidiaries other than ZionSolutions not to exceed $10,000,000 per Special
Purpose Subsidiary;

 

(xv)                            unsecured obligations of EnergySolutions or Parent pursuant to documents
identified in clauses (b), (h) and (l) in the definition of the term “Zion
Agreements”;

 

(xvi)                         unsecured obligations of EnergySolutions or Parent pursuant to any SPS
Project Documentation (other than the Zion Agreements), including any guarantee
bond; provided that the aggregate amount of such obligations shall not
exceed $50,000,000 per Special Purpose Subsidiary (other than Zion Solutions)
and $150,000,000 for all Special Purpose Subsidiaries; and

 

(xvii)       unsecured
obligations under agreements of EnergySolutions or any of its Subsidiaries
entered into in connection with the provision or acquisition of services,
supplies and equipment in the ordinary course of the Permitted Business.

 

(d)                                 Conditions to Permitted Acquisitions, Real Property Acquisitions and
Permitted Investments.  No Permitted Acquisition, Real Property
Acquisition or Permitted Investment permitted under Section 7.5(b) or 7.5(c) may
be consummated unless:

 

(i)                                     (A) Parent and EnergySolutions shall be in pro forma compliance with
the financial covenants set forth in Section 7.6 before and after giving
effect to such Permitted Acquisition, Real Property Acquisition or Permitted
Investment, as the case may be, (B) no Default shall have occurred and be
continuing (or would occur after giving effect thereto) and (C) such
Permitted Acquisition, Real Property Acquisition or Permitted Investment shall
not be reasonably expected to have a Material Adverse Change;

 

(ii)                                  with respect to any Permitted Acquisition, Real Property Acquisition or
Permitted Investment of more than $20,000,000, EnergySolutions shall provide
the Administrative Agent and the Lenders with notice thereof, not less than
10 days prior to the proposed consummation thereof, and with copies of all
material information pertaining to such Permitted Acquisition, Real Property
Acquisition or Permitted Investment, as the case may be, and a certificate
signed by an Authorized Signatory of EnergySolutions, certifying pro forma
compliance with the covenants listed in clause (i) of this
Section 7.5(d), together with any calculations necessary to demonstrate
such compliance; and

 

101

 

(iii)                               Sections 5.10, 5.12 and 6.4(c) have been complied with.

 

SECTION 7.6  Financial Covenants.  Parent, EnergySolutions and their respective
Subsidiaries shall not:

 

(a)                                  Leverage Ratio.  Permit the Leverage Ratio on any date to
exceed the ratio for the period that includes such date set forth below:

 

	
  Period
  Ending:

  	
   

  	
  Maximum Leverage Ratio:

  	
   

  
	
  September 30, 2010

  	
   

  	
  4.75

  	
   

  
	
  December 31, 2010

  	
   

  	
  4.75

  	
   

  
	
  March 31, 2011

  	
   

  	
  4.50

  	
   

  
	
  June 30, 2011

  	
   

  	
  4.50

  	
   

  
	
  September 30, 2011

  	
   

  	
  4.50

  	
   

  
	
  December 31, 2011

  	
   

  	
  4.50

  	
   

  
	
  March 31, 2012

  	
   

  	
  4.25

  	
   

  
	
  June 30, 2012

  	
   

  	
  4.25

  	
   

  
	
  September 30, 2012

  	
   

  	
  4.25

  	
   

  
	
  December 31, 2012

  	
   

  	
  4.25

  	
   

  
	
  March 31, 2013

  	
   

  	
  4.00

  	
   

  
	
  June 30, 2013

  	
   

  	
  4.00

  	
   

  
	
  September 30, 2013

  	
   

  	
  4.00

  	
   

  
	
  December 31, 2013

  	
   

  	
  4.00

  	
   

  
	
  March 31, 2014

  	
   

  	
  3.75

  	
   

  
	
  June 30, 2014

  	
   

  	
  3.75

  	
   

  
	
  September 30, 2014

  	
   

  	
  3.75

  	
   

  
	
  December 31, 2014

  	
   

  	
  3.75

  	
   

  
	
  March 31, 2015

  	
   

  	
  3.50

  	
   

  
	
  June 30, 2015

  	
   

  	
  3.50

  	
   

  
	
  September 30, 2015

  	
   

  	
  3.50

  	
   

  
	
  December 31, 2015

  	
   

  	
  3.50

  	
   

  
	
  March 31, 2016

  	
   

  	
  3.50

  	
   

  
	
  June 30, 2016

  	
   

  	
  3.50

  	
   

  
	
  September 30, 2016

  	
   

  	
  3.50

  	
   

  

 

(b)                                 Interest Coverage Ratio.  Permit the Interest Coverage Ratio for any
period to be less than the ratio for such period set forth below:

 

	
  Period
  Ending:

  	
   

  	
  Minimum Interest Coverage Ratio:

  	
   

  
	
  September 30, 2010

  	
   

  	
  2.00

  	
   

  
	
  December 31, 2010

  	
   

  	
  2.00

  	
   

  
	
  March 31, 2011

  	
   

  	
  2.00

  	
   

  
	
  June 30, 2011

  	
   

  	
  2.00

  	
   

  
	
  September 30, 2011

  	
   

  	
  2.00

  	
   

  
	
  December 31, 2011

  	
   

  	
  2.00

  	
   

  
	
  March 31, 2012

  	
   

  	
  2.00

  	
   

  
	
  June 30, 2012

  	
   

  	
  2.00

  	
   

  

 

102

 

	
  September 30, 2012

  	
   

  	
  2.00

  	
   

  
	
  December 31, 2012

  	
   

  	
  2.00

  	
   

  
	
  March 31, 2013

  	
   

  	
  2.00

  	
   

  
	
  June 30, 2013

  	
   

  	
  2.00

  	
   

  
	
  September 30, 2013

  	
   

  	
  2.00

  	
   

  
	
  December 31, 2013

  	
   

  	
  2.00

  	
   

  
	
  March 31, 2014

  	
   

  	
  2.00

  	
   

  
	
  June 30, 2014

  	
   

  	
  2.00

  	
   

  
	
  September 30, 2014

  	
   

  	
  2.00

  	
   

  
	
  December 31, 2014

  	
   

  	
  2.25

  	
   

  
	
  March 31, 2015

  	
   

  	
  2.25

  	
   

  
	
  June 30, 2015

  	
   

  	
  2.25

  	
   

  
	
  September 30, 2015

  	
   

  	
  2.25

  	
   

  
	
  December 31, 2015

  	
   

  	
  2.25

  	
   

  
	
  March 31, 2016

  	
   

  	
  2.25

  	
   

  
	
  June 30, 2016

  	
   

  	
  2.25

  	
   

  
	
  September 30, 2016

  	
   

  	
  2.25

  	
   

  

 

SECTION 7.7  Affiliate Transactions; Restricted
Payments; Restricted Debt Payments. 
(a)  Parent and EnergySolutions each shall not, and shall not
permit any of their respective Subsidiaries to, at any time enter into any
transaction or series of related transactions with any Affiliate of Parent,
EnergySolutions or any other Subsidiary, other than (i) (A) in the
ordinary course of business or (B) in an amount less than $500,000 per
year in the aggregate for all such transactions and (ii) in each case, on
terms that are no less favorable to Parent, EnergySolutions or such Subsidiary
than those that would reasonably be obtained by Parent, EnergySolutions or such
Subsidiary at that time in a comparable arm’s-length transaction with an
unrelated third party, except (1) as described on Schedule 4.19, (2) reasonable
and customary fees and expenses paid to non-officer members of the board of
directors (or similar governing body) of Parent, EnergySolutions or such
Subsidiary, (3) transactions between or among the Loan Parties not
involving any other Affiliate or (4) any Restricted Payment permitted
under Section 7.7(b).

 

(b)                                 Parent and EnergySolutions each shall not, and shall not permit any of
their respective Subsidiaries to, directly or indirectly, declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so, other than (i) so long
as no Default has occurred and is continuing at the time thereof or would
result therefrom, Restricted Payments to the holders of Equity Interests of
Parent during any period of four consecutive fiscal quarters in an amount not
to exceed $10,000,000, (ii) so long as no Default has occurred and is
continuing at the time thereof or would result therefrom, Restricted Payments
in an aggregate cumulative amount for all such Restricted Payments under this
clause (ii) not, when taken together with the cumulative amount of
expenditures made pursuant to Section 7.7(c)(vii), in excess of 30% of the
amount of cumulative Available Excess Cash Flow (computed, however, without deductions
in respect of Permitted Uses pursuant to clause (ii) of the
definition of such term); provided that the amount of any such
Restricted Payment at the time made does not exceed the Available Excess Cash
Flow immediately prior to such time and Available Excess Cash Flow is reduced
by the amount of such Restricted Payment when made, (iii) dividends or
other distributions made by any Subsidiary with respect to its capital stock,
partnership or membership interests or other similar Equity Interests, ratably
to the

 

103

 

holders of such Equity
Interests; provided that cash dividends paid by EnergySolutions to
Parent may only be paid at such times and in such amounts as shall be necessary
to permit Parent to make Restricted Payments otherwise permitted to be made by
it hereunder or to discharge its other permitted liabilities as and when due,
(iv) dividends or other distributions paid by Parent to holders of its
Equity Interests payable solely in additional Equity Interests of Parent
permitted hereunder, (v) repurchases by Parent of Equity Interests upon
the exercise of stock options if such Equity Interests represent a portion of
the exercise price of such options, (vi) cash payments by Parent in lieu
of the issuance of fractional shares representing insignificant interests in
Parent in connection with the exercise of warrants, options or other securities
convertible into or exercisable for capital stock in Parent,
(vii) Restricted Payments by Parent, not exceeding $2,000,000 in the
aggregate for any fiscal year, pursuant to and in accordance with stock option
plans or agreements for directors, officers or employees of Parent,
EnergySolutions or their respective Subsidiaries and (viii) Tax
Distributions.

 

(c)                                  Parent and EnergySolutions each shall not, and shall not permit any of
their respective Subsidiaries to, make any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal
of or interest on any Indebtedness, or any payment or other distribution
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, defeasance, cancellation or termination of any Indebtedness in an
aggregate principal amount of $5,000,000 or more, except:

 

(i)                                     payments of or in respect of Indebtedness created under the Loan
Documents;

 

(ii)                                  regularly scheduled interest and principal payments as and when due in
respect of any Indebtedness, other than payments in respect of subordinated
indebtedness prohibited by the subordination provisions thereof;

 

(iii)                               refinancings of Indebtedness to the extent permitted under Section 7.1;

 

(iv)                              payments of secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the assets securing such Indebtedness in
transactions permitted hereunder;

 

(v)                                 prepayments of Capitalized Lease Obligations;

 

(vi)                              payments or purchases of Indebtedness made solely with Equity Interests
of Parent (other than Disqualified Equity Interests); and

 

(vii)                           prepayments, purchases or redemptions of other Indebtedness provided that
the aggregate cumulative amount of expenditures in connection with all such
prepayments, purchases or redemptions under this clause (vii) do not
exceed, when taken together with the cumulative amount of Restricted Payments
made pursuant to Section 7.7(b)(ii), 30% of Available Excess Cash Flow
(computed, however, without deductions in respect of Permitted Uses pursuant to
clause (ii) of the definition of such term); provided that the
amount of any such expenditure at the time made does not 

 

104

 

exceed the
Available Excess Cash Flow immediately prior to such time and Available Excess
Cash Flow is reduced by the amount of such expenditure when made.

 

SECTION 7.8  ERISA Liabilities.  Parent and EnergySolutions each shall not,
and shall not permit any of their respective Subsidiaries to, permit the assets
of any of their Plans to be less than the accumulated benefit obligations of
all such Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standard Board Accounting Standards Codification
No. 715-Compensation-Retirement Benefits) by an amount that could reasonably
be expected to have a Material Adverse Change if the Plans were terminated.

 

SECTION 7.9  Limitation on Preferred Stock.  Parent and EnergySolutions each shall not,
and shall not permit any of their respective Subsidiaries (other than any
Special Purpose Subsidiary) to issue any preferred stock or other preferred
Equity Interests; provided that Parent may issue preferred stock or
other preferred Equity Interests that, in each case, do not constitute
Disqualified Equity Interests.

 

SECTION 7.10  Negative Pledge.  (a)  Parent and EnergySolutions
each shall not, and subject to clause (b) below, shall not permit any of
their respective Subsidiaries (other than Special Purpose Subsidiaries) to,
enter into or permit to exist any agreement or arrangement (other than this
Agreement, any other Loan Document or the Senior Notes Documents) that limits
or conditions the ability of Parent, EnergySolutions or any of their respective
Subsidiaries to create, incur, assume or suffer to exist Liens on any asset or
property of such Person except that this Section 7.10 shall not prohibit (i) any
negative pledge incurred or provided in connection with any Lien referred to in
clause (e) of the definition of the term “Permitted Lien” solely to
the extent any such negative pledge relates to the property secured by or the
subject of such Lien, (ii) any restrictions on any Subsidiary under any
agreement in effect at the time such Subsidiary becomes a Subsidiary, so long
as such agreement was not entered into in contemplation of such Person becoming
a Subsidiary, (iii) any agreements governing any purchase money Liens or
Capitalized Lease Obligations otherwise permitted hereby (in which case, any
such prohibition or limitation shall only be effective against the assets
financed thereby), (iv) customary restrictions on assignment of contracts
contained within such contracts, (v) customary restrictions with respect
to an asset imposed pursuant to an agreement for the disposition of such asset
(so long as such disposition is permitted by Section 7.4 and which
agreement is not proscribed by a provision hereof other than those contained in
this Section 7.10(a)), (vi) customary restrictions in joint venture
agreements of joint ventures that are not Subsidiaries and (vii) restrictions
or conditions in agreements and other documents governing or evidencing
Additional Permitted Debt to the extent such restrictions and conditions do not
affect the ability of Parent, EnergySolutions or any of their respective
Subsidiaries to create Liens securing the Secured Obligations in favor of the
Administrative Agent and for the benefit of the Secured Parties.

 

(b)                                 To the extent any Special Purpose Subsidiary or the direct parent company
of any Special Purpose Subsidiary is restricted or prohibited by the United
States Nuclear Regulatory Commission or any other Governmental Authority, or by
a counterparty to such Special Purpose Subsidiary’s SPS Project Documentation,
from granting Liens on such Special Purpose Subsidiary’s assets or Equity
Interests, as applicable, for the benefit of the Secured Parties, then such
Special Purpose Subsidiary or its direct parent company shall not, and shall
cause each of

 

105

 

its respective
subsidiaries not to, create, incur, assume or suffer to exist Liens, other than
Permitted Liens, on the assets or Equity Interests of such Special Purpose
Subsidiary for the benefit of any Person that is not a counterparty to such
Special Purpose Subsidiary’s SPS Project Documentation.

 

SECTION 7.11  Payment Restrictions Affecting
Subsidiaries.  Parent and
EnergySolutions each shall not, directly or indirectly, enter into or suffer to
exist, or permit any of their respective Subsidiaries (other than any Special
Purpose Subsidiary) to enter into or suffer to exist, any agreement or
arrangement limiting the ability of EnergySolutions or any of its Subsidiaries
to declare or pay dividends or other distributions in respect of its Equity
Interests or repay or prepay Indebtedness owed to, make loans or advances to,
or otherwise transfer assets to or invest in, EnergySolutions or any of its
Subsidiaries (whether through a covenant restricting dividends, loans, asset
transfers or investments, a financial covenant or otherwise), except (a) the
Loan Documents and the Senior Notes Documents, (b) any agreement in effect
at the time a Person not previously a Subsidiary becomes a Subsidiary, so long
as such agreement was not entered into in contemplation of such Person becoming
a Subsidiary, (c) restrictions on the transfer (other than in favor of the
Administrative Agent for the benefit of the Secured Parties) of any asset
subject to a Permitted Lien, (d) customary provisions restricting
subletting or assignment of any lease governing any leasehold interest of EnergySolutions
or any of its Subsidiaries (other than in favor of the Administrative Agent for
the benefit of the Secured Parties), (e) customary provisions restricting
assignment (other than in favor of the Administrative Agent for the benefit of
the Secured Parties) of any licensing agreement (in which EnergySolutions or
any of its Subsidiaries is the licensee) or other contract entered into by
EnergySolutions or any of its Subsidiaries in the ordinary course of business
or (f) customary provisions in agreements and other documents governing or
evidencing Additional Permitted Debt restricting the ability of EnergySolutions
to make Restricted Payments to Parent.

 

SECTION 7.12  Speculative Transactions.  Parent and EnergySolutions each shall not,
and shall not permit any of their respective Subsidiaries to, enter into any
Derivative Contract other than a Hedge Agreement.

 

SECTION 7.13  Name, Jurisdiction of Organization;
Business; Fiscal Year.  Parent and
EnergySolutions agree not to effect or permit any change referred to in
Section 6.4(h) unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Administrative
Agent to continue at all times following such change to have a valid, legal and
perfected security interest in all the Collateral.  None of Parent, EnergySolutions or any of
their respective Subsidiaries shall enter into or conduct any business other
than a Permitted Business.  Parent,
EnergySolutions and each of their respective Subsidiaries will maintain a
fiscal year ending on December 31, provided that they may, not more than
once during the term of this Agreement, adopt and thereafter maintain a fiscal
year ending on or within seven days of December 31, in accordance with a
4-4-5 week quarterly close schedule or a calendar close schedule (it being
understood that the adoption of such a fiscal year will not be the basis for
any adjustments to the covenants or the calculation of Excess Cash Flow under
this Agreement).

 

SECTION 7.14  Permitted Activities.  (a)  Notwithstanding anything
herein to the contrary, Parent shall not (a) incur, directly or
indirectly, any Indebtedness (other than Indebtedness permitted by
Section 7.1 and the Senior Notes); (b) create or suffer to exist any

 

106

 

Liens upon any property
or asset now owned or hereafter acquired by it other than Liens created under
the Security Documents or permitted pursuant to Section 7.2;
(c) engage in any business or activity, or own any property or asset,
other than (i) owning all the Equity Interests in EnergySolutions, (ii) performing
its obligations and activities incidental thereto under the Loan Documents and (iii) making
Restricted Payments and Investments to the extent permitted by this Agreement; (d) consolidate
with, merge with or into, or convey, transfer or lease all or substantially all
its assets to, any Person; (e) sell or otherwise dispose of any Equity
Interests in EnergySolutions; (f) create or acquire any Subsidiary or make
or own any Investment in any Person other than EnergySolutions; (g) fail
to hold itself out to the public as a legal entity separate and distinct from
all other Persons; and (h) become an obligor in respect of Indebtedness
incurred pursuant to Section 7.1(u).

 

SECTION 7.15  Maximum Capital Expenditures.  (a)The aggregate Capital Expenditures of
Parent, EnergySolutions and their respective Subsidiaries on a consolidated
basis in any fiscal year shall not be greater than the amount set forth below
in respect of such fiscal year

 

	
  Fiscal Year

  	
   

  	
  Maximum Capital Expenditures

  	
   

  
	
  2010

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  2011

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  2012

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  2013

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  2014

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  2015

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  2016

  	
   

  	
  $

  	
  40,000,000

  	
   

  

 

However,
to the extent the aggregate Capital Expenditures of Parent, EnergySolutions and
their respective Subsidiaries on a consolidated basis in any one fiscal year
(ending on or after December 31, 2011) are less than the maximum amount
permitted pursuant to this Section 7.15, then EnergySolutions and its
Subsidiaries on a consolidated basis may expend an additional amount on Capital
Expenditures in a subsequent fiscal year equal to the amount of the lesser of
the shortfall from such fiscal year and 50% of the amount permitted for Capital
Expenditures in the prior fiscal year; provided, however, that
Capital Expenditures in any fiscal year shall first be deemed to utilize the
full amount set forth in the table above for such fiscal year before being
applied to any such carryover amount and in no circumstance may any shortfall
be carried forward from more than one fiscal year at any time.

 

(b)                                 Parent, EnergySolutions and their respective Subsidiaries can make
Capital Expenditures at any time in excess of the amounts otherwise permitted
by Section 7.15(a) so long as the amount of any such Capital
Expenditure at the time when made does not exceed the Available Excess Cash
Flow immediately prior to such time and Available Excess Cash Flow is reduced
by the amount of such Capital Expenditure when it is made.

 

107

 

ARTICLE VIII

 

Events
of Default

 

SECTION 8.1  Events of Default.  Each of the following events shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:

 

(a)                                  any representation, warranty, certification or other statement made or
deemed made under this Agreement or any other Loan Document or in any report,
notice or certificate provided pursuant to or in connection with this Agreement
or any other Loan Document shall prove to be incorrect or misleading in any
material respect when made or when deemed made;

 

(b)                                 EnergySolutions shall default (i) in the payment of any principal
amount of the Loans or (ii) in the payment of any interest, fees or other
amounts payable to any of the Lender Parties or the Administrative Agent, when
due, and such default, in the case of this clause (ii), shall not be cured by
payment in full within three Business Days;

 

(c)                                  Parent, EnergySolutions or any of their respective Subsidiaries shall
default in the performance or observance of any agreement or covenant contained
in Article VII or Section 5.1 (to the extent requiring
EnergySolutions to be in good standing in its jurisdiction of organization),
5.9, 5.17 or 6.5(a);

 

(d)                                 Parent, EnergySolutions or any of their respective Subsidiaries shall
default in the performance or observance of any agreement or covenant contained
in this Agreement and not specifically referred to elsewhere in this
Section 8.1, and such default shall not be cured within a period of 30
days after the earlier of (i) the date any officer or manager of Parent or
EnergySolutions becomes aware of such default and (ii) the date notice of
such default to EnergySolutions from the Administrative Agent or any Lender
becomes effective in accordance with Section 10.1;

 

(e)                                  there shall occur any default in the performance or observance of any
agreement or covenant or breach of any representation or warranty contained in
any of the Loan Documents (other than this Agreement or as otherwise provided
in this Section 8.1) by Parent, EnergySolutions, any of their respective
Subsidiaries or any other obligor thereunder, which shall not be cured within a
period of 30 days after the earlier of (i) the date any officer or manager
of Parent or EnergySolutions becomes aware of such default and (ii) the
date notice of such default to EnergySolutions from the Administrative Agent or
any Lender becomes effective in accordance with Section 10.1;

 

(f)                                    there shall be entered and remain unstayed a decree or order for relief
in respect of Parent, EnergySolutions or any of their respective Subsidiaries
under Title 11 of the United States Code or any other applicable Federal or
state bankruptcy law or other similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official of Parent,
EnergySolutions or any of their respective Subsidiaries, or of any substantial
part of their respective properties, or ordering the winding-up or liquidation
of the affairs of Parent, 

 

108

 

EnergySolutions or any of
their respective Subsidiaries; or an involuntary petition shall be filed or
case commenced against Parent, EnergySolutions or any of their respective
Subsidiaries and a temporary stay entered and (i) such petition and stay
shall not be diligently contested or (ii) such petition and stay shall
continue undismissed for a period of 45 consecutive days;

 

(g)                                 Parent, EnergySolutions or any of their respective Subsidiaries shall
file a petition, answer or consent seeking relief under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy law or other
similar law, or Parent, EnergySolutions or any of their respective Subsidiaries
shall consent to the institution of proceedings thereunder or to the filing of
any such petition or shall seek or consent to the appointment or taking of
possession of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of Parent, EnergySolutions or any of
their respective Subsidiaries, or of any substantial part of their respective
properties, or Parent, EnergySolutions or any of their respective Subsidiaries
shall fail generally to pay its respective debts as they become due, or Parent,
EnergySolutions or any of their respective Subsidiaries shall take any action
in furtherance of any such action;

 

(h)                                 a judgment shall be entered by any court against Parent, EnergySolutions
or any of their respective Subsidiaries for the payment of money which,
individually or in the aggregate with other such judgments (to the extent the
amount of such judgment exceeds the amount of insurance coverage therefor, net
of any deductible or co-payment, and as to which the related carrier has been
notified of such judgment and has responded in writing and not denied insurance
coverage therefor, including the amount of such coverage), exceeds $10,000,000,
or a warrant of attachment or execution or similar process shall be issued or
levied against property of Parent, EnergySolutions or any of their respective
Subsidiaries which, together with all other such property of Parent,
EnergySolutions or any of their respective Subsidiaries subject to other such
process, exceeds in value $10,000,000 in the aggregate, and within 60 days
after the entry, issue or levy thereof, such judgment, warrant or process shall
not have been paid or discharged or stayed pending appeal, or after the
expiration of any such stay, such judgment, warrant or process shall not have
been paid, discharged or reduced to an amount less than $5,000,000;

 

(i)                                     (i) there shall be at any time any failure to meet any minimum
funding standard as defined in Section 302 of ERISA or in Section 412
of the Code, with respect to any Plan or any ERISA Affiliate Plan; (ii) a
trustee shall be appointed by a United States District Court to administer any
such Plan or ERISA Affiliate Plan; (iii) the PBGC or a plan administrator
shall institute proceedings to terminate any Plan or ERISA Affiliate Plan; or
Parent, EnergySolutions or any of their respective Subsidiaries shall incur any
liability under Title IV of ERISA in connection with the termination of any
Plan or an ERISA Affiliate Plan (other than liabilities for benefit obligations
that are sufficiently funded at the time of termination in accordance with
applicable provisions of Title IV of ERISA); (iv) any Plan, or trust
created under any such Plan, shall engage in a “prohibited transaction” (as
such term is defined in Section 406 of ERISA or Section 4975 of the
Code) which would subject Parent, EnergySolutions or any of their respective
Subsidiaries to a tax or penalty in any amount on “prohibited transactions”
imposed by Section 502 of ERISA or Section 4975 of the Code or an
obligation to indemnify any other person for such tax or penalty; or (v) the
incurrence by Parent, EnergySolutions or any their respective Subsidiaries of
any liability with respect to a withdrawal or partial withdrawal from any
Multiemployer Plan or the receipt by Parent, EnergySolutions or any of their
respective 

109

 

Subsidiaries of any
notice, or the receipt by any Multiemployer Plan from Parent, EnergySolutions
or any of their respective Subsidiaries of any notice, concerning the
imposition on Parent, EnergySolutions or any of their respective Subsidiaries of
withdrawal liability as defined under Title IV of ERISA or a determination that
a Multiemployer Plan is, or is expected to be, insolvent or in reorganization
with the meaning of Title IV of ERISA, and, in each case, such event or
condition, together with other such events or conditions, if any, would
reasonably be expected to subject Parent and the Subsidiaries to any tax,
liability or penalty in excess of $5,000,000;

 

(j)                                     there shall occur (i) any default under any Material Indebtedness of
Parent, EnergySolutions or any of their respective Subsidiaries that results in
such Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or both)
the holder or holders of such Indebtedness or any trustee or agent on its or
their behalf, to accelerate the maturity of such Indebtedness; (ii) any
default under any Derivative Contract having a notional principal amount of
$5,000,000 or more; or (iii) unless otherwise permitted herein, any
defeasance or any other action the result of which is to defease or repay any
Subordinated Indebtedness of EnergySolutions or the Senior Notes without the
prior payment in full of the Obligations;

 

(k)                                  one or more of the Necessary Authorizations shall be terminated or
revoked such that EnergySolutions and the Subsidiaries are no longer able to
operate their businesses or any portion thereof or any of such Necessary
Authorizations shall fail to be renewed at the stated expiration thereof such
that EnergySolutions and the Subsidiaries are no longer able to operate their
businesses or any portion thereof and retain the revenue received therefrom,
except in the event that the termination or revocation could not reasonably be
expected to have a Material Adverse Change;

 

(l)                                     (i) any Security Document or any other Loan Document, or any
material provision of any such document, shall at any time and for any reason
be declared by a court of competent jurisdiction to be null and void, (ii) a
proceeding shall be commenced by Parent, EnergySolutions or any of their
respective Subsidiaries or by any Governmental Authority having jurisdiction
over Parent, EnergySolutions or any of their respective Subsidiaries seeking to
establish the invalidity or unenforceability thereof (exclusive of questions of
interpretation of any provision thereof) or (iii) Parent, EnergySolutions
or any of their respective Subsidiaries shall deny that it has any liability or
obligation for the payment of principal or interest or other obligations
purported to be created under any Security Document or any other Loan Document;

 

(m)                               any Security Document shall for any reason fail or cease to create a
valid, first priority Lien on any material portion of the Collateral purported
to be covered thereby, subject to any Permitted Lien, or any such Lien shall
cease to be perfected, except if such failure or cessation results from the
Administrative Agent’s failure to file any UCC-l financing statement or UCC-3
continuation statement in the appropriate jurisdiction or to maintain
possession or control of such portion of the Collateral or from a sale or
assignment of such portion of the Collateral by the Administrative Agent; or

 

(n)                                 there shall occur a Change of Control.

 

110

 

SECTION 8.2  Remedies.  (a)  If an Event of Default
specified in Section 8.1 (other than an Event of Default under
Section 8.1(f) or 8.1(g)) shall have occurred and shall be
continuing, the Administrative Agent may, and at the request of the Majority
Lenders shall, formally declare that an Event of Default has occurred and (i) terminate
all or any portion of the Commitments of each Lender and the obligation of each
Lender to make Loans and of the Issuing Banks to issue Letters of Credit and (ii) declare
the principal of and interest on the Loans and all other amounts owed to the
Lender Parties and the Administrative Agent under this Agreement and any other
Obligations to be forthwith due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly, in each case,
waived, anything in this Agreement or any other Loan Document to the contrary
notwithstanding, and the Commitments shall thereupon forthwith terminate and
all such amounts shall be immediately due and payable.

 

(b)                                 Upon the occurrence and continuance of an Event of Default specified in
Section 8.1(f) or 8.1(g), all principal, interest and other amounts
due outstanding hereunder, and all other Obligations, shall thereupon and
concurrently therewith become due and payable, the Commitments of each Lender
and the obligation of each Lender to make Loans and of the Issuing Banks to
issue Letters of Credit shall forthwith terminate and the principal amount of
the Loans outstanding hereunder shall bear interest at the Default Rate, all
without any action by the Administrative Agent, the Lender Parties or the
Majority Lenders or any of them and without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in this
Agreement or in the other Loan Documents to the contrary notwithstanding.

 

(c)                                  Upon acceleration of the Obligations, as provided in Section 8.2(a) or 8.2(b),
the Administrative Agent and the Lender Parties shall have all of the
post-default rights granted to them, or any of them, under the Loan Documents
and under Applicable Law.

 

(d)                                 Upon acceleration of the Obligations, as provided in Section 8.2(a) or 8.2(b),
the Administrative Agent, upon request of the Majority Lenders, shall have the
right to the appointment of a receiver for the properties and assets of
EnergySolutions and the Subsidiaries, both to operate and to sell such
properties and assets, and EnergySolutions, for itself and on behalf of the
Subsidiaries, hereby consents to such right and such appointment and hereby
waives any objection Parent, EnergySolutions or any of their respective
Subsidiaries may have thereto or the right to have a bond or other security
posted by the Administrative Agent on behalf of the Secured Parties, in
connection therewith.

 

(e)                                  The rights and remedies of the Administrative Agent and the Lender
Parties hereunder shall be cumulative and not exclusive.

 

SECTION 8.3  Required Consents and Transfer of Licenses
Upon Event of Default.  If an Event
of Default specified in Section 8.1 shall have occurred and be continuing
and the Administrative Agent exercises a remedy under any Loan Document or
Applicable Law, Parent and EnergySolutions shall, at the request of the
Administrative Agent:  (a) use
commercially reasonable efforts to seek and obtain all required prior approvals
and consents to the direct or indirect transfer of control of the Property, the
Permitted Business or the applicable Licenses or Environmental Permits,
including all approvals and consents required by any Environmental Law, License
or Environmental Permit, (b) cooperate with the Administrative Agent, or
any receiver or other Person appointed by the Administrative Agent, to assist
such Person in 

 

111

 

identifying the Licenses
and Environmental Permits required to own, maintain, operate or transfer the
Property or the Permitted Business from and after the occurrence of such Event
of Default and (c) use commercially reasonable efforts to either transfer
to the Administrative Agent or a Person designated by the Administrative Agent
the Licenses and Environmental Permits of EnergySolutions, where permissible,
or obtain new Licenses and Environmental Permits for the Administrative Agent
or Person designated by the Administrative Agent.  Such efforts, cooperation and assistance
shall include EnergySolutions’, Parent’s or their respective agents’ attendance
at public hearings and, to the extent necessary, the use of the knowledge,
expertise and information of Parent, EnergySolutions and their respective
agents, experts and employees.

 

ARTICLE IX

 

The
Administrative Agent

 

Each
of the Lender Parties hereby irrevocably appoints the entity named as
Administrative Agent in the heading of this Agreement to serve as administrative
agent and collateral agent under the Loan Documents, and authorizes the
Administrative Agent to take such actions and to exercise such powers as are
delegated to the Administrative Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental
thereto.  Without limiting the generality
of the foregoing, the Administrative Agent is hereby expressly authorized by
the Lenders to execute any and all Loan Documents (including the Guarantee and
Collateral Agreement) and other documents with respect to the Collateral and
the rights of the Secured Parties with respect thereto, as contemplated by this
Agreement, and each Lender hereby acknowledges the provisions set forth in the
Guarantee and Collateral Agreement and agrees to be bound by such provisions
with the same force and effect, and to the same extent, as if such Lender were
a party to the Guarantee and Collateral Agreement.  In addition, to the extent required under the
laws of any jurisdiction other than the United States, each of the Lender
Parties hereby grants to the Administrative Agent any required powers of
attorney to execute any Security Document governed by the laws of such
jurisdiction on such Lender Party’s behalf.

 

The
Person serving as the Administrative Agent hereunder shall have the same rights
and powers in its capacity as a Lender or an Issuing Bank as any other Lender
or Issuing Bank and may exercise the same as though it were not the
Administrative Agent, and such Person and its Affiliates may accept deposits
from, lend money to, act as the financial advisor or in any other advisory
capacity for and generally engage in any kind of business with Parent,
EnergySolutions, any of their respective Subsidiaries or any other Affiliate of
any of the foregoing as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders.

 

The
Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. 
Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) the
Administrative Agent shall not have any duty to take any discretionary action
or to exercise any discretionary power, except discretionary rights and powers
expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise as directed in writing by the Majority Lenders (or

 

112

 

such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in the Loan Documents); provided that the
Administrative Agent shall not be required to take any action that, in its
opinion, could expose the Administrative Agent to liability or be contrary to
any Loan Document or applicable law, and (c) except as expressly set forth
in the Loan Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to Parent, EnergySolutions, any of their respective Subsidiaries or
any other Affiliate of any of the foregoing that is communicated to or obtained
by the Person serving as Administrative Agent or any of its Affiliates in any
capacity.  The Administrative Agent shall
not be liable for any action taken or not taken by it with the consent or at
the request of the Majority Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in
good faith to be necessary, under the circumstances as provided in
Section 10.10) or in the absence of its own gross negligence or willful
misconduct.  The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agent by Parent, EnergySolutions,
a Lender or an Issuing Bank, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document or the occurrence of any Default, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or
any other agreement, instrument or document, or (v) the satisfaction of
any condition set forth in Article III or elsewhere in any Loan Document,
other than to confirm receipt of items expressly required to be delivered to
the Administrative Agent or satisfaction of any condition that expressly refers
to the matters described therein being acceptable or satisfactory to the
Administrative Agent.  Notwithstanding
anything herein to the contrary, the Administrative Agent shall not have any
liability arising from any confirmation of the Revolving Exposure or the
component amounts thereof.

 

The
Administrative Agent shall be entitled to rely, and shall not incur any
liability for relying, upon any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution)
believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person (whether or not such Person in fact meets
the requirements set forth in the Loan Documents for being the signatory,
sender or authenticator thereof).  The
Administrative Agent also shall be entitled to rely, and shall not incur any
liability for relying, upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person (whether or not such Person in
fact meets the requirements set forth in the Loan Documents for being the
signatory, sender or authenticator thereof), and may act upon any such
statement prior to receipt of written confirmation thereof.  The Administrative Agent may consult with
legal counsel (who may be counsel for EnergySolutions), independent accountants
and other experts selected by it, and shall not be liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.

 

The
Administrative Agent may perform any of and all its duties and exercise its
rights and powers hereunder or under any other Loan Document by or through any
one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-

 

113

 

agent
may perform any of and all their duties and exercise their rights and powers
through their respective Related Parties.  The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of the Administrative
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

 

Subject
to the terms of this paragraph, the Administrative Agent may resign at any time
from its capacity as such.  In connection
with such resignation, the Administrative Agent shall give notice of its intent
to resign to the Lender Parties and EnergySolutions.  Upon receipt of any such notice of
resignation, the Majority Lenders shall have the right, in consultation with
EnergySolutions, to appoint a successor. 
If no successor shall have been so appointed by the Majority Lenders and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its intent to resign, then the retiring
Administrative Agent may, on behalf of the Lender Parties, appoint a successor
Administrative Agent, which shall be a bank with an office in New York, New
York, or an Affiliate of any such bank. 
Upon the acceptance of its appointment as Administrative Agent hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents.  The fees payable by EnergySolutions to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed by Parent, EnergySolutions and such
successor.  Notwithstanding the foregoing,
in the event no successor Administrative Agent shall have been so appointed and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its intent to resign, the retiring
Administrative Agent may give notice of the effectiveness of its resignation to
the Lender Parties and EnergySolutions, whereupon, on the date of effectiveness
of such resignation stated in such notice, (a) the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under the
other Loan Documents; provided that, solely for purposes of maintaining
any security interest granted to the Administrative Agent under any Security
Document for the benefit of the Secured Parties, the retiring Administrative
Agent shall continue to be vested with such security interest as collateral
agent for the benefit of the Secured Parties and, in the case of any Collateral
in the possession of the Administrative Agent, shall continue to hold such
Collateral, in each case until such time as a successor Administrative Agent is
appointed and accepts such appointment in accordance with this paragraph (it
being understood and agreed that the retiring Administrative Agent shall have
no duty or obligation to take any further action under any Security Document, including
any action required to maintain the perfection of any such security interest),
and (b) the Majority Lenders shall succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Administrative Agent;
provided that (i) all payments required to be made hereunder or
under any other Loan Document to the Administrative Agent for the account of
any Person other than the Administrative Agent shall be made directly to such
Person and (ii) all notices and other communications required or
contemplated to be given or made to the Administrative Agent shall also
directly be given or made to each Lender and each Issuing Bank.  Following the effectiveness of the
Administrative Agent’s resignation from its capacity as such, the provisions of
this Article IX and Section 10.2, as well as any exculpatory,
reimbursement and indemnification provisions set forth elsewhere in this
Agreement or in any other Loan Document, shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken

 

114

 

by
any of them while it was acting as Administrative Agent and in respect of the
matters referred to in the proviso under clause (a) above.

 

Each
Lender Party acknowledges that it has, independently and without reliance upon
the Administrative Agent, the Arrangers or any other Lender Party, or any of
the Related Parties of any of the foregoing, and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender Party also acknowledges that it will, independently and
without reliance upon the Administrative Agent, the Arrangers or any other
Lender Party, or any of the Related Parties of any of the foregoing, and based
on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

 

Each
Lender, by delivering its signature page to this Agreement and funding its
Loans on the Closing Date, or delivering its signature page to an
Assignment and Assumption or an Accession Agreement as provided in
Section 2.18(g) pursuant to which it shall become a Lender hereunder,
shall be deemed to have acknowledged receipt of, and consented to and approved,
each Loan Document and each other document required to be delivered to, or be
approved by or satisfactory to, the Administrative Agent or the Lenders on the
Closing Date.

 

No
Secured Party shall have any right individually to realize upon any of the
Collateral or to enforce any Guarantee of the Secured Obligations, it being
understood and agreed that all powers, rights and remedies under the Loan
Documents may be exercised solely by the Administrative Agent on behalf of the
Secured Parties in accordance with the terms thereof.  In the event of a foreclosure by the
Administrative Agent on any of the Collateral pursuant to a public or private
sale or other disposition, the Administrative Agent or any Lender may be the
purchaser or licensor of any or all of such Collateral at any such sale or
other disposition, and the Administrative Agent, as agent for and
representative of the Secured Parties (but not any Lender or Lenders in its or
their respective individual capacities) shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion
of the Collateral sold at any such public sale, to use and apply any of the
Obligations as a credit on account of the purchase price for any collateral
payable by the Administrative Agent on behalf of the Secured Parties at such
sale or other disposition.  Each Secured
Party, whether or not a party hereto, will be deemed, by its acceptance of the
benefits of the Collateral and of the Guarantees of the Secured Obligations provided
under the Loan Documents, to have agreed to the foregoing provisions.

 

Notwithstanding
anything herein to the contrary, neither the Arrangers nor any Person named on
the cover page of this Agreement as a “syndication agent” or a “documentation
agent” shall have any duties or obligations under this Agreement or any other
Loan Document (except in its capacity, as applicable, as a Lender or an Issuing
Bank) but shall have the benefit of the indemnities provided for hereunder.

 

The
provisions of this Article are solely for the benefit of the
Administrative Agent, the Lenders and the Issuing Banks, and none of Parent,
EnergySolutions or any other Loan Party shall have any rights as a third-party
beneficiary of any such provisions.

 

115

 

ARTICLE X

 

Miscellaneous

 

SECTION 10.1  Notices.  (a)  All notices and other
communications provided for hereunder shall be in writing and shall be mailed
by certified or registered mail, faxed, e-mailed (to the extent provided in
paragraph (c) below) or delivered by hand or overnight courier
service.  All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:

 

(i)            If
to Parent or EnergySolutions, to it at:

 

423
West 300 South, Suite 200

Salt
Lake City, UT 84101

Attn:  Mark McBride

Tel:  801-303-1687

Fax:  801-413-5649

E-mail:   mcmcbride@energysolutions.com

 

(ii)           If to the Administrative Agent, to it at:

 

1111
Fannin Street, Floor 10

Houston,
TX, 77002-6925, United States

Attn:
Leslie Hill

Tel:   713-750-2318

Fax:
713-427-6307 

E-mail:
leslie.d.hill@chase.com

 

with
a copy to such counsel to the Administrative Agent as the Administrative Agent
may designate in writing from time to time.

 

(iii)          If
to any Lender Party, to it at such address (or fax number) as shall have been
previously provided by such Lender Party to the Administrative Agent in
writing.

 

Copies
shall be provided to Persons other than the parties hereto only in the case of
notices under Article VIII.

 

(b)                                 Notices sent by hand or overnight courier service, or mailed by certified
or registered mail, shall be deemed to have been given when received; notices
sent by fax shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient); and notices delivered through electronic communications to the
extent provided in paragraph (c) below shall be effective as provided in
such paragraph.

 

(c)                                  Notices and other communications to the Lender Parties hereunder may be
delivered or furnished by electronic communications (including email and
Internet and intranet websites) pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices under Article II
to any Lender Party if such Lender Party has 

 

116

 

notified the
Administrative Agent that it is incapable of receiving notices under such Article by
electronic communication.  Any notices or
other communications to the Administrative Agent, Parent or EnergySolutions may
be delivered or furnished by electronic communications pursuant to procedures
approved by the recipient thereof prior thereto; provided that approval
of such procedures may be limited or rescinded by any such Person by notice to
each other such Person.

 

(d)                                 Any party hereto may change its address or fax number for notices and
other communications hereunder by notice to the other parties hereto.

 

SECTION 10.2  Expenses; Indemnity; Damage Waiver.  (a)  Parent and EnergySolutions
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Arrangers and their Affiliates (including the
reasonable and documented fees, charges and disbursements of not more than one
outside legal counsel for all indemnified parties plus, if necessary, one local
counsel per relevant jurisdiction plus, in the case of a conflict of interest
or separate defenses available to the indemnified parties, one additional
counsel per affected party), in connection with the structuring, arrangement
and syndication of the credit facilities provided for herein, including the
preparation, execution and delivery of the Engagement Letter and the Fee
Letter, as well as the preparation, execution, delivery and administration of
this Agreement, the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by any Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder and (iii) all out-of-pocket expenses incurred by
the Administrative Agent, the Arrangers, any Issuing Bank or any Lender,
including the fees, charges and disbursements of any counsel for any of the
foregoing (limited to one outside legal counsel for the Administrative Agent
plus one outside legal counsel for all other indemnified parties plus, if
necessary, one local counsel per relevant jurisdiction plus, in the case of a
conflict of interest or separate defenses available to the indemnified parties,
one additional counsel per affected party), in connection with the enforcement
or protection of its rights in connection with the Loan Documents, including
its rights under this Section 10.2, or in connection with the Loans made
or Letters of Credit issued hereunder, including all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit.

 

(b)                                 Parent and EnergySolutions shall indemnify the Administrative Agent (and
any sub-agent thereof), the Arrangers, each Lender and Issuing Bank, and each
Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”), against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, penalties, liabilities and related expenses
(including the reasonable fees, charges and disbursements of not more than one
outside legal counsel for all Indemnitees plus, if necessary, one local counsel
per relevant jurisdiction plus, in the case of a conflict of interest or
separate defenses available to the indemnified, one additional counsel per
affected party), incurred by or asserted against any Indemnitee arising out of,
in connection with, or as a result of (i) the structuring, arrangement and
the syndication of the credit facilities provided for herein, the preparation,
execution, delivery and administration of the Engagement Letter, the Fee
Letter, this Agreement, the other Loan Documents or any other agreement or
instrument contemplated hereby or thereby, the performance by the parties to
the Engagement Letter, the Fee Letter, this Agreement or the other Loan
Documents of their obligations thereunder or the consummation of the
Transactions or any other transactions

 

117

 

contemplated thereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by any Issuing Bank to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any
actual or alleged presence or Release of Hazardous Materials on or from any
Mortgaged Property or any other property currently or formerly owned or
operated by Parent, EnergySolutions or any of their respective Subsidiaries, or
any Environmental Liability related in any way to Parent, EnergySolutions or
any of their respective Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory and whether
initiated against or by any party to the Engagement Letter, the Fee Letter,
this Agreement or any other Loan Document, any Affiliate of any of the
foregoing or any third party (and regardless of whether any Indemnitee is a
party thereto); provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
penalties, liabilities or related expenses are determined by a court of
competent jurisdiction by final and non-appealable judgment to have resulted
from the gross negligence or wilful misconduct of such Indemnitee.

 

(c)                                  To the extent that Parent and EnergySolutions fail to pay any amount
required to be paid by them under paragraph (a) or (b) of this
Section to the Administrative Agent (or any sub-agent thereof), any
Issuing Bank or any Related Party of any of the foregoing, each Lender
severally agrees to pay to the Administrative Agent (or any such sub-agent),
such Issuing Bank or such Related Party, as the case may be, such Lender’s pro
rata share (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or such sub-agent) or such Issuing Bank in its capacity
as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent) or any Issuing Bank in connection
with such capacity.  For purposes hereof,
a Lender’s “pro rata share” shall be determined based upon its share of the sum
of the total Revolving Exposures, outstanding Term Loans and unused Commitments
at the time (or most recently outstanding and in effect).

 

(d)                                 To the extent permitted by applicable law, neither Parent nor
EnergySolutions shall assert, or permit any of their Affiliates or Related
Parties to assert, and each hereby waives, any claim against any Indemnitee (i) for
any damages arising from the use by others of information or other materials
obtained through telecommunications, electronic or other information
transmission systems (including the Internet) except, with respect to any
Indemnitee, to the extent resulting from gross negligence or willful misconduct
by such Indemnitee, or (ii) on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby or thereby,
the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.

 

(e)                                  All amounts due under this Section 10.2 shall be payable promptly
after written demand therefor.  For the
avoidance of doubt, this Section 10.2 shall not apply to Taxes other than
any Taxes that represent losses or damages arising from any non-Tax claim.

 

118

 

SECTION 10.3  Setoff.  In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence of an Event of Default and during the continuance thereof,
the Administrative Agent and the Lender Parties are hereby authorized by Parent
and EnergySolutions at any time and from time to time, without notice to
Parent, EnergySolutions or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, time or demand, including Indebtedness evidenced
by certificates of deposit, in each case whether matured or unmatured) and any
other Indebtedness at any time held or owing by any Lender Party or the
Administrative Agent to or for the credit or the account of Parent,
EnergySolutions or any of their respective Subsidiaries against and on account
of the Obligations irrespective of whether (a) any Lender Party or the Administrative
Agent shall have made any demand hereunder or (b) the Administrative Agent
shall have declared the principal of and interest on the Loans and other
amounts due hereunder to be due and payable as permitted by Section 8.2
and although such Obligations or any of them shall be contingent or
unmatured.  Upon direction by the
Administrative Agent with the consent of the Majority Lenders, each Lender
Party holding deposits of Parent, EnergySolutions or any of their respective
Subsidiaries shall exercise its setoff rights as so directed.

 

SECTION 10.4  Successors and Assigns.  (a)  The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of any Issuing Bank that issues any Letter of Credit), except that (i) neither
Parent nor EnergySolutions may assign or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender (and any attempted assignment or transfer
by Parent or EnergySolutions without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section 10.4.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of any Issuing Bank that issues any Letter of Credit), Participants
(to the extent provided in paragraph (c) of this Section 10.4), the
Arrangers, and, to the extent expressly contemplated hereby, the Related
Parties of any of the Administrative Agent, the Arrangers, any Issuing Bank and
any Lender) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)                                 (i) Subject to the conditions set forth in paragraph (b)(ii) below,
any Lender may assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld) of:

 

(A) EnergySolutions; provided that no
consent of EnergySolutions shall be required (1) for an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund and (2) if an Event
of Default has occurred and is continuing, for any other assignment; and provided
further that EnergySolutions shall be deemed to have consented to any
such assignment unless it shall object thereto by written notice to the
Administrative Agent within five Business Days after having received notice
thereof; and

 

119

 

(B) the Administrative Agent; provided
that no consent of the Administrative Agent shall be required for an assignment
of any Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund; and

 

(C) in the case of any assignment of all or a
portion of a Revolving Commitment or any Lender’s obligations in respect of its
Revolving L/C Exposure, each Revolving Issuing Bank.

 

(ii)                                  Assignments shall be subject to the following additional conditions:

 

(A) except in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining amount of the assigning Lender’s Commitment or Loans of any
Class, the amount of the Commitment or Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $5,000,000 or, in the case of Term Loans, $1,000,000 unless
each of EnergySolutions and the Administrative Agent otherwise consents; provided
that no such consent of EnergySolutions shall be required if an Event of
Default has occurred and is continuing;

 

(B) each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement; provided that this clause (B) shall
not be construed to prohibit the assignment of a proportionate part of all the
assigning Lender’s rights and obligations in respect of one Class of
Commitments or Loans;

 

(C) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500; and

 

(D) the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire in
which the assignee designates one or more credit contacts to whom all
syndicate-level information (which may contain material non-public information
about Parent, EnergySolutions and their Related Parties or their securities) will
be made available and who may receive such information in accordance with the
assignee’s compliance procedures and Applicable Law, including Federal, state
and foreign securities laws; and

 

(E) without the prior written consent of the
Administrative Agent, no assignment shall be made to a prospective assignee
that bears a relationship to EnergySolutions described in Section 108(e)(4) of
the Code.

 

(iii)                               Subject to acceptance and recording thereof pursuant to
paragraph (b)(v) of this Section 10.4, from and after the
effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of

 

120

 

a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.16, 2.17 and 10.2).

 

(iv)                              The Administrative Agent, acting solely for this purpose as a
non-fiduciary agent of EnergySolutions, shall maintain at one of its offices a
copy of each Assignment and Assumption delivered to it and records of the names
and addresses of the Lenders, and the Commitment of, and principal amount and,
if applicable, currencies of the Loans and L/C Disbursements owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and Parent, EnergySolutions, the Administrative Agent, the Issuing
Banks and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by EnergySolutions and, as to entries pertaining to it, any Issuing
Bank or Lender, at any reasonable time and from time to time upon reasonable
prior notice.

 

(v)                                 Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in this Section 10.4 and any
written consent to such assignment required by this Section 10.4, the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. 
No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.  Each assignee, by its execution and delivery
of an Assignment and Assumption, shall be deemed to have represented to the
assigning Lender and the Administrative Agent that such assignee is an Eligible
Assignee.

 

(c)                                  (i) Any Lender may, without the consent of EnergySolutions, the
Administrative Agent or any Issuing Bank, sell participations to one or more
Eligible Assignees (“Participants”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitments and the Loans owing to it); provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (C) Parent, EnergySolutions, the
Administrative Agent, the Issuing Banks and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement; and (D) without the prior
written consent of the Administrative Agent, no participation shall be sold to
a prospective participant that bears a relationship to EnergySolutions
described in Section 108(e)(4) of the Code.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement or any other Loan Document;
provided that such agreement or instrument may provide that such Lender
will not, without the consent of the

 

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Participant, agree to any
amendment, modification or waiver described in the first proviso to Section 10.10(b) that
affects such Participant or requires the approval of all the Lenders.  Subject to paragraph (c)(ii) of
this Section 10.4, Parent and EnergySolutions agree that each Participant
shall be entitled to the benefits of Sections 2.14, 2.16 and 2.17 to the
same extent as if it were a Lender (subject to the requirements and limitations
therein, including the requirements under Section 2.17(f)) and had
acquired its interest by assignment pursuant to paragraph (b) of this
Section; provided that such Participant agrees to be subject to the
provisions of Section 2.15 and 2.20 as if it were an assignee under
paragraph (b) of this Section.  To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 10.3 as though it were a Lender; provided that
such Participant agrees to be subject to Section 2.15(b) as though it
were a Lender.  Each Lender that sells a
participation shall, acting solely for this purpose as an agent of
EnergySolutions, maintain a register on which it enters the name and address of
each Participant and the principal amounts (and stated interest) of each
Participant’s interest in the Loans or other obligations under this Agreement
(the “Participant Register”).  The
entries in the Participant Register shall be conclusive absent manifest error,
and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of
this Agreement notwithstanding any notice to the contrary.

 

(ii)                                  A Participant shall not be entitled to receive any greater payment under Section 2.14,
2.16 or 2.17 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant.  A Participant that would be a Non-U.S. Lender
if it were a Lender shall not be entitled to the benefits of Section 2.17
unless EnergySolutions is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of EnergySolutions, to
comply with Section 2.17(h) as though it were a Lender.

 

(d)                                 Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section 10.4 shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

 

SECTION 10.5  Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement and the other Loan Documents constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the
subject matter hereof (but do not supersede any other provisions of the
Engagement Letter or the Fee Letter (or any separate letter agreements with
respect to fees payable to the Administrative Agent or any Issuing Bank) that
do not by the terms of such documents terminate upon the effectiveness of this
Agreement, all of which provisions shall remain in full force and effect).  Except as provided in Section 3.1, this Agreement
shall become effective when it shall have been executed by the Administrative
Agent and the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.  Delivery of

 

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an executed counterpart
of a signature page of this Agreement by facsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.

 

SECTION 10.6  Governing Law and Jurisdiction.  (a)  THIS AGREEMENT, ANY NOTES AND
ANY LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.

 

(b)                                 EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING
IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. 
EACH OF THE PARTIES HERETO AGREES THAT A FINAL NON-APPEALABLE JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW.  NOTHING IN THIS AGREEMENT SHALL
AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER PARTY MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS IN THE COURTS OF ANY JURISDICTION.

 

(c)                                  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR FEDERAL
COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)                                 EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.1.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.

 

SECTION 10.7  Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or

 

123

 

unenforceability without
invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other jurisdiction.

 

SECTION 10.8  Interest.  (a)  In no event shall the amount
of interest due or payable hereunder exceed the maximum rate of interest
allowed by Applicable Law, and in the event any such payment is inadvertently
made by EnergySolutions or inadvertently received by any Lender, then such
excess sum shall be credited as a payment of principal, unless EnergySolutions
shall notify the Administrative Agent or such Lender in writing that it elects
to have such excess returned forthwith. 
It is the express intent hereof that EnergySolutions not pay and the
Lenders not receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may legally be paid by EnergySolutions under Applicable
Law.

 

(b)                                 Notwithstanding the use by the Lenders of the Base Rate, the Federal
Funds Rate and the Eurodollar Rate as reference rates for the determination of
interest on the Loans, the Lenders shall be under no obligation to obtain funds
from any particular source in order to charge interest to EnergySolutions at
interest rates related to such reference rates.

 

SECTION 10.9  Table of Contents and Headings.  The Table of Contents and the headings of the
various subdivisions used in this Agreement are for convenience of reference
only and shall not in any way modify or amend any of the terms or provisions
hereof, nor be used in connection with the interpretation of any provision
hereof.

 

SECTION 10.10  Amendments and Waivers.  (a)  No failure or delay by the
Administrative Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies
of the Administrative Agent, the Issuing Banks and the Lenders hereunder and
under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have.  No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the generality of the
foregoing, the execution and delivery of this Agreement, the making of a Loan
or the issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or any
Issuing Bank may have had notice or knowledge of such Default at the time.

 

(b)                                 None of this Agreement, any other Loan Document or any provision hereof
or thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by
Parent, EnergySolutions, the Administrative Agent and the Majority Lenders and,
in the case of any other Loan Document, pursuant to an agreement or agreements
in writing entered into by the Administrative Agent and the Loan Party or Loan
Parties that are parties thereto, in each case with the consent of the Majority
Lenders; provided that (i) any provision of this Agreement or any
other Loan Document may be amended by an agreement in writing entered into by
Parent, EnergySolutions and the Administrative Agent to cure any ambiguity,
omission, defect or inconsistency so long as, in

 

124

 

each case, the Lenders
shall have received at least five Business Days’ prior written notice thereof
and the Administrative Agent shall not have received, within five Business Days
of the date of such notice to the Lenders, a written notice from the Majority
Lenders stating that the Majority Lenders object to such amendment and (ii) no
such agreement shall (A) increase the Commitment of any Lender without the
written consent of such Lender, (B) reduce the principal amount of any
Loan or L/C Disbursement or reduce the rate of interest thereon, or reduce any
fees payable hereunder, without the written consent of each Lender affected
thereby, (C) postpone the scheduled maturity date of any Loan, or the date
of any scheduled payment of the principal amount of any Term Loan under Section 2.8,
or the required date of reimbursement of any L/C Disbursement, or any date for
the payment of any interest or fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender affected thereby,
(D) change Section 2.15(a) or 2.15(b) in a manner that
would alter the pro rata sharing of payments required thereby without the
written consent of each Lender, (E) change any of the provisions of this
Section or the percentage set forth in the definition of the term “Majority
Lenders” or any other provision of any Loan Document specifying the number or
percentage of Lenders (or Lenders of any Class) required to waive, amend or
modify any rights thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender (or each Lender of such
Class, as the case may be); provided that, with the consent of the
Majority Lenders, the provisions of this Section and the definition of the
term “Majority Lenders” may be amended to include references to any new class
of loans created under this Agreement (or to lenders extending such loans) on
substantially the same basis as the corresponding references relating to the
existing Classes of Loans or Lenders, (F) release Parent or any Subsidiary
Guarantor from its Guarantee under the Guarantee and Collateral Agreement
(except as expressly provided in Section 10.11 or the Guarantee and
Collateral Agreement), or limit its liability in respect of such Guarantee,
without the written consent of each Lender, (G) release all or
substantially all the Collateral from the Liens of the Security Documents,
without the written consent of each Lender (except as expressly provided in Section 10.11
or the applicable Security Document (including any such release by the
Administrative Agent in connection with any sale or other disposition of the
Collateral upon the exercise of remedies under the Security Documents), it
being understood that an amendment or other modification of the type of
obligations secured by the Security Documents shall not be deemed to be a
release of the Collateral from the Liens of the Security Documents), and (H) change
any provisions of any Loan Document in a manner that by its terms adversely
affects the rights in respect of payments due to Lenders holding Loans of any Class differently
than those holding Loans of any other Class, without the written consent of
Lenders representing a Majority in Interest of each affected Class; provided
further that (1) no such agreement shall amend, modify, extend or
otherwise affect the rights or obligations of the Administrative Agent or any
Issuing Bank without the prior written consent of the Administrative Agent or
such Issuing Bank, as the case may be, and (2) any waiver, amendment or
modification of this Agreement that by its terms affects the rights or duties
under this Agreement of the Lenders of a particular Class (but not the
Lenders of any other Class), may be effected by an agreement or agreements in
writing entered into by Parent, EnergySolutions and the requisite number or
percentage in interest of the affected Class of Lenders that would be
required to consent thereto under this Section if such Class of
Lenders were the only Class of Lenders hereunder at the time.  Notwithstanding the foregoing provisions of
this Section 10.10(b), (x) the Term Loans or Revolving Commitments of
any Class may be 

 

125

 

extended to a later
maturity or termination date with the agreement and consent of the Majority
Lenders (or the Majority in Interest Lenders of such Class if such
extension affects only the rights of Lenders of holding Loans or having
Commitments of such Class) and each extending Lender of such Class, and each
such extending Lender can receive payment of interest rates and fees in respect
of its extended Loans or Commitments different from the interest rates and fees
payable to the non-extending Lenders of such Class, which payment shall be
deemed not to violate the pro rata provisions in this Agreement, and (y) with
the agreement and consent of the Persons referred to therein, and without the
necessity of obtaining the approval of any other Lenders hereunder, Incremental
Facility Amendments may be entered into pursuant to Section 2.18.

 

SECTION 10.11  Release of Liens and Guarantees.  A Subsidiary Guarantor shall automatically be
released from its obligations under the Loan Documents, and all security
interests created by the Security Documents in Collateral owned by such
Subsidiary Guarantor shall automatically be released, upon the consummation of
any transaction permitted by this Agreement as a result of which such
Subsidiary Guarantor ceases to be a Subsidiary; provided that, if so
required by this Agreement, the Majority Lenders shall have consented to such
transaction and the terms of such consent shall not have provided
otherwise.  Upon any sale or other
transfer by any Loan Party (other than to Parent, EnergySolutions or any of
their respective Subsidiaries) of any Collateral in a transaction permitted
under this Agreement, or upon the effectiveness of any written consent to the
release of the security interest created under any Security Document in any
Collateral pursuant to Section 10.10, the security interests in such
Collateral created by the Security Documents shall be automatically released.  In connection with any termination or release
pursuant to this Section, the Administrative Agent shall execute and deliver to
any Loan Party, at such Loan Party’s expense, all documents that such Loan
Party shall reasonably request to evidence such termination or release.  Any execution and delivery of documents
pursuant to this Section 10.11 shall be without recourse to or warranty by
the Administrative Agent.

 

SECTION 10.12  Other Relationships.  No relationship created hereunder or under
any other Loan Document shall in any way affect the ability of the
Administrative Agent or its Affiliates and each Lender Party or its respective
Affiliates to enter into or maintain business relationships with
EnergySolutions or any of its Affiliates beyond the relationships specifically
contemplated by this Agreement and the other Loan Documents.

 

SECTION 10.13  Directly or Indirectly.  If any provision in this Agreement refers to
any action taken or to be taken by any Person or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person, whether or not expressly
specified in such provision.

 

SECTION 10.14  Reliance on and Survival of Various
Provisions.  All covenants, agreements,
statements, representations and warranties made herein or in any certificate
delivered pursuant hereto (a) shall be deemed to have been relied upon by
the Administrative Agent and each of the Lender Parties notwithstanding any
investigation heretofore or hereafter made by them and notwithstanding that the
Arrangers, the Administrative Agent or any Lender Party may have had notice or
knowledge of any Default or incorrect representation or warranty at the time
any Loan Document is executed and delivered or any credit is extended hereunder

 

126

 

and (b) shall
survive the execution and delivery of this Agreement and shall continue in full
force and effect so long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not expired or terminated. 
Notwithstanding the foregoing or anything else to the contrary set forth
in this Agreement or any other Loan Document, in the event that, in connection
with the refinancing or repayment in full of the credit facilities provided for
herein, a Revolving Issuing Bank shall have provided to the Administrative
Agent a written consent to the release of the Revolving Lenders from their
obligations hereunder with respect to any Revolving Letter of Credit issued by
such Revolving Issuing Bank (whether as a result of the obligations of
EnergySolutions (and any other account party) in respect of such Letter of
Credit having been collateralized in full by a deposit of cash with such
Revolving Issuing Bank, or being supported by a letter of credit that names
such Revolving Issuing Bank as the beneficiary thereunder, or otherwise), then
from and after such time such Revolving Letter of Credit shall cease to be a “Revolving
Letter of Credit” outstanding hereunder for all purposes of this Agreement and
the other Loan Documents, and the Revolving Lenders shall be deemed to have no
participations in such Revolving Letter of Credit, and no obligations with
respect thereto, under Sections 2.6(f) and 2.6(h).  The provisions of Sections 2.14, 2.15(c),
2.16, 2.17, 10.2, 10.19 and Article IX shall survive and remain in full
force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.

 

SECTION 10.15  Senior Debt.  (a) In the event that Parent,
EnergySolutions or any other Loan Party shall at any time issue or have
outstanding any Subordinated Indebtedness, Parent and EnergySolutions shall
take or cause such other Loan Party to take all such actions as shall be
necessary to cause the Obligations to constitute senior indebtedness (however
denominated) in respect of such Subordinated Indebtedness and to enable the
Lenders to have and exercise any payment blockage or other remedies available
or potentially available to holders of senior indebtedness under the terms of
such Subordinated Indebtedness.  Without
limiting the foregoing, the Obligations are hereby designated as “senior
indebtedness” and as “designated senior indebtedness” under and in respect of
any indenture or other agreement or instrument under which such Subordinated
Indebtedness is or may be outstanding and are further given all such other
designations as shall be required under the terms of any such Subordinated
Indebtedness in order that the Lenders may have and exercise any payment
blockage or other remedies available or potentially available to holders of
senior indebtedness under the terms of such Subordinated Indebtedness.

 

SECTION 10.16  Confidentiality.  The Lender Parties shall hold all information
which has been identified as non-public, proprietary or confidential by
EnergySolutions obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential
information of this nature and in accordance with safe and sound financial
service industry practices; provided, however, that the Lender
Parties may make disclosure of any such information (a) to their
examiners, Affiliates, outside auditors, counsel, consultants, appraisers and
other professional advisors in connection with this Agreement; (b) to any
pledgee referred to in Section 10.4(d) or any direct or indirect
contractual counterparty in swap agreements or such contractual counterparty’s
professional advisor (so long as such pledgee, contractual counterparty or
professional advisor to such contractual counterparty agrees

 

127

 

to be bound by the
provisions of this Section 10.16; (c) to the National Association of
Insurance Commissioners or any similar organization or any nationally
recognized rating agency that requires access to information about a Lender
Party’s investment portfolio in connection with ratings issued with respect to
such Lender Party; (d) as reasonably required by any proposed syndicate
member or any proposed transferee or Participant in connection with the
contemplated transfer of any Loans or participation therein (so long as such
proposed syndicate member or proposed transferee or Participant agrees to be
bound by the provisions of this Section 10.16); (e) as required or
requested by any Governmental Authority or representative thereof; (f) in
connection with the exercise of any right or remedy under this Agreement, the
Secured Hedge Agreements, any other Loan Document or related document; (g) as
required by any law, rule, regulation or judicial process; or (h) with
respect to any litigation to which any Loan Party, any Lender Party or any of
their respective Affiliates is a party. 
In no event shall the Administrative Agent or any Lender Party be
obligated or required to return any materials furnished to it by
EnergySolutions.  The foregoing
provisions shall not apply to a Lender Party with respect to information that (i) is
or becomes generally available to the public (other than through a breach of
this Section 10.16 by such Lender Party), (ii) is already in the
possession of such Lender Party on a nonconfidential basis, or (iii) comes
into the possession of such Lender Party in a manner not known to such Lender
Party to involve a breach of a duty of confidentiality owing to
EnergySolutions.

 

SECTION 10.17  Patriot Act Notice.  Each Lender Party and the Administrative
Agent (for itself and not on behalf of any Lender Party) hereby notifies the
Loan Parties that pursuant to the requirements of the Patriot Act, it is
required to obtain, verify and record information that identifies each Loan
Party, which information includes the name and address of such Loan Party and
other information that will allow such Lender Party or the Administrative
Agent, as applicable, to identify such Loan Party in accordance with the
Patriot Act.  EnergySolutions shall, and
shall cause each of its Subsidiaries to, provide, to the extent commercially
reasonable, such information and take such actions as are reasonably requested
by the Administrative Agent or any Lender Parties in order to assist the
Administrative Agent and the Lenders in maintaining compliance with the Patriot
Act.

 

SECTION 10.18  Non-Public Information.  (a)  Each Lender acknowledges that
all information, including requests for waivers and amendments, furnished by
Parent, EnergySolutions or the Administrative Agent pursuant to or in
connection with, or in the course of administering, this Agreement will be
syndicate-level information, which may contain MNPI.  Each Lender represents to Parent,
EnergySolutions and the Administrative Agent that (i) it has developed
compliance procedures regarding the use of MNPI and that it will handle MNPI in
accordance with such procedures and applicable law, including Federal, state
and foreign securities laws, and (ii) it has identified in its
Administrative Questionnaire a credit contact who may receive information that
may contain MNPI in accordance with its compliance procedures and applicable
law, including Federal, state and foreign securities laws.

 

(b)                                 Parent, EnergySolutions and each Lender acknowledges that, if information
furnished by Parent or EnergySolutions pursuant to or in connection with this
Agreement is being distributed by the Administrative Agent through
IntraLinks/IntraAgency, SyndTrak or another website or other information
platform (the “Platform”), (i) the Administrative Agent may post
any information that Parent or EnergySolutions has indicated as containing MNPI
solely on 

 

128

 

that portion of the
Platform as is designated for Private Side Lender Representatives and (ii) if
Parent or EnergySolutions has not indicated whether any information furnished
by it pursuant to or in connection with this Agreement contains MNPI, the
Administrative Agent reserves the right to post such information solely on that
portion of the Platform as is designated for Private Side Lender
Representatives.

 

(c)                                  Each of Parent and EnergySolutions agrees, at the request of the
Administrative Agent, to specify whether any information furnished by Parent or
EnergySolutions to the Administrative Agent pursuant to, or in connection with,
this Agreement contains MNPI (it being acknowledged that nothing in this
paragraph shall be deemed to obligate the Administrative Agent to make any such
request).

 

SECTION 10.19  Conversion of Currencies.  (a)  If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange
used shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.

 

(b)                                 The obligations of EnergySolutions in respect of any sum due to any party
hereto or any holder of the obligations owing hereunder (the “Applicable
Creditor”) shall, notwithstanding any judgment in a currency (the “Judgment
Currency”) other than the currency in which such sum is stated to be due
hereunder (the “Agreement Currency”), be discharged only to the extent
that, on the Business Day following receipt by the Applicable Creditor of any
sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may
in accordance with normal banking procedures in the relevant jurisdiction
purchase the Agreement Currency with the Judgment Currency; if the amount of
the Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, EnergySolutions agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. 
The obligations of EnergySolutions contained in this Section 10.19
shall survive the termination of this Agreement and the payment of all other
amounts owing hereunder.

 

SECTION 10.20  WAIVER OF JURY TRIAL.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF THE
ADMINISTRATIVE AGENT OR ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF. 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN

 

129

 

INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.

 

SECTION 10.21  No Fiduciary Relationship.  Each of Parent and EnergySolutions, on behalf
of itself and its Subsidiaries, agrees that in connection with all aspects of
the transactions contemplated hereby and any communications in connection
therewith, Parent, EnergySolutions, their respective Subsidiaries and other
Affiliates, on the one hand, and the Administrative Agent, the Lenders and
their Affiliates, on the other hand, will have a business relationship that
does not create, by implication or otherwise, any fiduciary duty on the part of
the Administrative Agent, the Lenders or their Affiliates, and no such duty
will be deemed to have arisen in connection with any such transactions or
communications.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

130

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

 

	
   

  	
  ENERGYSOLUTIONS, INC.,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Richard Tooze

  
	
   

  	
   

  	
  Name:
  Richard Tooze

  
	
   

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENERGYSOLUTIONS,
  LLC,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Richard Tooze

  
	
   

  	
   

  	
  Name:
  Richard Tooze

  
	
   

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A., individually and as Administrative Agent,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Peter Christensen

  
	
   

  	
   

  	
  Name:
  Peter Christensen

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE AG, CAYMAN ISLANDS BRANCH

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  John D. Toronto

  
	
   

  	
   

  	
  Name:
  John D. Toronto

  
	
   

  	
   

  	
  Title:
  Director

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Vipul Dhadda

  
	
   

  	
   

  	
  Name:
  Vipul Dhadda

  
	
   

  	
   

  	
  Title:
  Associate

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITIBANK,
  N.A.,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Stuart G. Dickson

  
	
   

  	
   

  	
  Name:
  Stuart G. Dickson

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ZIONS
  BANK,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Rob McGee

  
	
   

  	
   

  	
  Name:
  Rob McGee

  
	
   

  	
   

  	
  Title:
  Vice President

  

 

131Exhibit 10.1

 

MASTER REPURCHASE AGREEMENT

 

Dated as of June 24, 2010

 

Between:

 

EAST
WEST BANK, on the one hand,

 

and

 

SYNERGY
CAPITAL MORTGAGE CORP.

 

and

 

EXCEL
MORTGAGE SERVICING, INC., on the other hand

 

1.                                      Applicability

 

From
time to time the parties hereto may enter into transactions in which either Synergy Capital Mortgage Corp. or Excel
Mortgage Servicing, Inc. (each a “Seller” and, collectively,
the “Sellers”) agrees to transfer to East West
Bank (“Buyer”) Eligible Loans against the transfer of funds
by Buyer to the relevant Seller, with a simultaneous agreement by Buyer to
transfer to the relevant Seller such Eligible Loans at a date certain or on
demand, against the transfer of funds by such Seller.  Each such transaction shall be referred to
herein as a “Transaction” and shall be governed by this Agreement (including ,
without limitation, the terms and conditions contained in the Term Sheet), as
the same shall be amended from time to time in accordance with the terms
hereof.  This Agreement is a commitment
by Buyer to enter into Transactions up to the Maximum Aggregate Purchase Price.

 

2.                                      Definitions

 

(a)                          “Accepted
Servicing Practices” shall mean with respect to any Mortgage Loan, those
accepted and prudent mortgage servicing practices (including collection
procedures) of prudent mortgage lending institutions that service mortgage
loans of the same type as the Mortgage Loans in the jurisdiction where the
related Mortgaged Property is located, and which are in each case in accordance
with FHA, VA, Ginnie Mae, Freddie Mac and Fannie Mae servicing guides
(including, without limitation, future updates) and all servicing requirements
of the Approved Takeout Investor for such Mortgage Loan, and in a manner at
least equal in quality to the servicing each Seller or Seller’s designee
provides to mortgage loans which it owns in its own portfolio.

 

(b)                         “Act of
Insolvency” shall mean (i) the commencement by such party as debtor of
any case or proceeding under any bankruptcy, insolvency, reorganization,
liquidation, moratorium, dissolution, delinquency or similar law, or such party
seeking the appointment or election of a receiver, conservator, trustee,
custodian or similar official for such party or any substantial part of its
property or the convening of any meeting of creditors for purposes of
commencing any such case or proceeding or seeking such an appointment or
election, (ii) the 

 

 

commencement of any such case or proceeding against
such party, or another seeking such an appointment or election, or the filing
against a party of an application for a protective decree under the provisions
of the Securities Investor Protection Act of 1970, which (A) is consented
to or not timely contested by such party, (B) results in the entry of an
order for relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or
(C) is not dismissed within 15 days, (iii) the making by such party
of a general assignment for the benefit of creditors, or (iv) the admission
in writing by such party of such party’s inability to pay such party’s debts as
they become due;

 

(c)                          “Additional
Purchased Eligible Loans” shall have the meaning set forth in
Paragraph 4(a) hereof;

 

(d)                         “Aged Loans”
shall mean a category of Purchased Eligible Loans, specified in the Term Sheet,
to which additional terms and conditions shall apply;

 

(e)                          “Agreement”
shall mean this Master Repurchase Agreement, as the same may be amended,
supplemented or restated from time to time;

 

(f)                            “Approved
Originator” shall mean each Seller or an originator (approved in writing by
Buyer, which approval shall not be unreasonably withheld) from which a Seller
purchases Mortgage Loans from time to time for the purchase and sale of
Eligible Loans hereunder.  Buyer shall
respond to requests for approval of any originator within five (5) Business
Days after  Sellers provide all required
information to Buyer;

 

(g)                         “Approved
Takeout Investor” shall mean (i) Fannie Mae, Freddie Mac, and Ginnie
Mae, and (ii) any other Person named on a list provided by Sellers and
approved in writing by Buyer, as that list may be modified from time to time by
Sellers with the written approval of Buyer, in each case such written approval
not to be unreasonably withheld.  Buyer
shall respond to requests for approval of any investor within five (5) Business
Days after Sellers provide all required information to Buyer;

 

(h)                         “Assignment
of Mortgage” shall mean an assignment of a Mortgage Loan executed by the
relevant Seller in blank with respect to Mortgage Loans that are not registered
with MERS, which is delivered to Buyer as a condition of funding a Transaction,
as described in Paragraph 3(a) hereof, and thereafter may be
(i) delivered to an Approved Takeout Investor pursuant to Paragraph 3(b)
hereof, or (ii) used by Buyer should any Seller fail to complete its
obligation to repurchase any Purchased Eligible Loan;

 

(i)                             “Business
Day” shall mean any day other than a Saturday, Sunday and any day on which
banks located in the State of California are authorized or required to close
for business;

 

(j)                             “Cash
Collateral Account” shall have the meaning set forth in the Term Sheet;

 

(k)                          “Closing
Agent” shall mean the title company or escrow agent that is responsible for
the final closing of a Mortgage Loan in favor of a Mortgagor.  Buyer may from time to time specify in
writing to Sellers that certain Closing Agents are not approved.  Sellers may not use a Closing Agent that has
been disapproved by Buyer;

 

2

 

(l)                             “Closing
Protection Letter” means a letter of indemnification from a title insurer
addressed to the relevant Seller, with coverage that is customarily acceptable
to Persons engaged in the Origination of mortgage loans, identifying the
Closing Agent covered thereby and indemnifying the relevant Seller against
losses incurred due to defects in title caused by malfeasance or fraud by the
Closing Agent or the failure of the Closing Agent to follow the specific
closing instructions specified by the relevant Seller in the escrow letter with
respect to the closing of one or more Mortgage Loans.  The Closing Protection Letter shall be either
with respect to the individual Mortgage Loan being purchased pursuant hereto or
a blanket Closing Protection Letter that covers closings conducted by the
Closing Agent in the jurisdiction in which the closing of such Mortgage Loan
takes place;

 

(m)                       “Custodian”
shall initially mean Buyer.  The parties
will work together in good faith to enter into a tri-party custodial agreement
with a third-party custodian reasonably acceptable to Buyer and Sellers;
provided, however, that in the event the parties are unable to reach agreement
on a third party custodian and a tri-party custodial agreement the Custodian
shall continue to be Buyer.  When Buyer,
Sellers and the third party custodian execute a tri-party custodial agreement,
this definition shall thereafter refer to such third-party custodian;

 

(n)                         “Custodial
Agreement” shall mean the Custodial Agreement entered into between Buyer,
Sellers and the third-party custodian as described in the definition of “Custodian”,
providing for the custody of records relating to the Purchased Eligible Loans,
as the same may be amended or restated from time to time;

 

(o)                         “Determination
Date” shall mean any date on which a determination is made by Buyer
relative to an applicable factor or amount under this Agreement, including
Price Differential, Maximum Aggregate Purchase Price or Repurchase Price;

 

(p)                         “Dry Funded
Mortgage Loan” shall mean an Eligible Mortgage Loan for which the documents
as described in  Exhibit A-2
hereto have been delivered to Buyer on or prior to the Purchase Date in
conjunction with a Transaction Request as described in Exhibit A-1
hereto;

 

(q)                         “Eligible
Loan” shall mean any Mortgage Loan owned by a Seller that satisfies the
requirements for purchase hereunder, including without limitation the
representations and warranties set forth in Exhibit B hereto pursuant to
Paragraph 9(c) hereof.

 

(r)                            “Event of
Default” shall mean any of the events specified in Paragraph 10
hereof;

 

(s)                          “Excel
Operating Account” shall have the meaning set forth in the Term Sheet.

 

(t)                            “Excel
Settlement Account” shall have the meaning set forth in the Term Sheet.

 

(u)                         “Fannie Mae”
shall mean the Federal National Mortgage Association;

 

(v)                         “FHA”
shall mean the Federal Housing Administration;

 

(w)                       “Freddie Mac”
shall mean the Federal Home Loan Mortgage Corporation;

 

3

 

(x)                           “Governmental
Authority” shall mean any applicable nation or government, an agency,
department, state or other political subdivision thereof, or any
instrumentality thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.  Governmental Authority shall include, without
limitation, each of Fannie Mae, Freddie Mac, FHA and Ginnie Mae.

 

(y)                         “GAAP”
shall mean generally accepted accounting principles in the United States;

 

(z)                           “Guarantor”
shall mean any Person who delivers a Guaranty hereunder;

 

(aa)                    “Guaranty” shall mean
the guaranty as of the date hereof as the same may be amended from time to
time, pursuant to which Guarantor fully and unconditionally guarantees the
obligations of each Seller hereunder, as the same may be amended or restated
from time to time, in the form of Exhibit D hereto;

 

(bb)                  “Ginnie Mae” shall
mean the Government National Mortgage Association;

 

(cc)                    “Income” shall mean
with respect to any Eligible Loan at any time, any principal thereof then payable
and all interest, sale proceeds and other collections and distributions thereon
or proceeds thereof (but not including any commitment fees, origination fees
and/or servicing fees);

 

(dd)                  “LIBOR” shall mean,
with respect to each day a Transaction is outstanding, the rate per annum equal
to the one-month London Interbank Offered Rate as compiled by the British
Bankers Association and published at or about 11:00 a.m., London, England time
on such date (and if such day is not a Business Day, the LIBOR rate in effect
on the Business Day immediately preceding such day); provided, that if
such rate shall not be so quoted, then as determined by Buyer, the one-month
Prime Rate on such date as published in The Wall Street Journal,
Western edition; provided, further that Buyer’s determination of LIBOR
shall be conclusive upon the parties absent manifest error on the part of
Buyer;

 

(ee)                    “Material Adverse Effect”
shall mean, with respect to any Person, any material adverse effect on
(i) the validity or enforceability of this Agreement or any other
Transaction Document, (ii) the business, operations, total property or
financial condition of such Person, (iii) the Purchased Eligible Loans
(together with each of the other assets granted to Buyer pursuant to Paragraph
6 hereof), (iv) the enforceability or priority of the lien and security
interest in favor of Buyer in respect of any material portion of the Purchased
Eligible Loans (together with each of the other assets granted to Buyer
pursuant to Paragraph 6 hereof), or (v) the ability of such Person to
fulfill its obligations under this Agreement or any other Transaction Document;

 

(ff)                        “Maximum
Aggregate Purchase Price” shall mean the amount set forth in the Term
Sheet;

 

(gg)                  “MERS” shall mean
Mortgage Electronic Registration Systems, Inc.;

 

(hh)                  “Mortgage” shall mean
the mortgage, deed of trust or other instrument creating a first lien on an
estate in fee simple interest in real property securing a Note;

 

4

 

(ii)                          “Mortgage
Documents” shall mean originals or certified copies of all of the
agreements, certificates and other documents evidencing, or related to the
origination and servicing of a Mortgage Loan, including, but not limited to,
the Note, the Mortgage, the Assignment of Mortgage, appraisals, guarantees,
insurance certificates, credit reports, the title insurance policy and title
document, as may be applicable to a particular Eligible Loan, all as and to the
extent the same have been delivered by the relevant Seller to Custodian for
Buyer.

 

(jj)                          “Mortgage
Loan” shall mean a first lien mortgage loan on single family residential
property consisting of a Note secured by a Mortgage, which satisfies the
requirements of the relevant Seller’s mortgage lending programs, and which
Mortgage Loan includes all right, title and interest of the lender or mortgagee
of such Mortgage Loan as a holder of both the beneficial and legal title to
such Mortgage Loan, including without limitation (i) all loan documents,
files and records of the mortgagee for such Mortgage Loan, (ii) the
monthly payments, any prepayments, insurance and other proceeds, (iii) all
Servicing Rights with respect to such Mortgage Loan, and (iv) all other
rights, interests, benefits, security, proceeds, remedies, claims and covenants
of the lender or mortgagee arising from or in connection with such Mortgage
Loan;

 

(kk)                    “Mortgagor” shall
mean the obligor on a Note;

 

(ll)                          “Note”
shall mean the promissory note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan;

 

(mm)              “Operating Account”
and “Operating Accounts” shall have the meaning set forth in the Term
Sheet;

 

(nn)                  “Payment Date” shall
mean the 15th day of each month (or if such day is not a Business Day the next
succeeding Business Day).

 

(oo)                  “Person” shall mean
any individual, corporation, company, voluntary association, partnership, joint
venture, limited liability company, trust, unincorporated association or
government (or any agency, instrumentality or political subdivision thereof);

 

(pp)                  “Pledge Agreement”
shall mean the pledge agreement as of the date hereof as the same may be
amended from time to time, pursuant to which each Seller pledges to Buyer
certain deposit accounts, in the form of Exhibit C hereto;

 

(qq)                  “Price Differential”
shall mean, with respect to any Transaction hereunder as of any date, the
aggregate amount obtained by daily application of the Pricing Rate for such
Transaction to the Purchase Price for such Transaction on a 360 day per year
basis for the actual number of days each Pricing Rate was in effect, commencing
on (and including) the Purchase Date and ending on (but excluding) the
Determination Date (reduced by any amount of such Price Differential previously
paid by a Seller to Buyer with respect to such Transaction);

 

(rr)                        “Pricing
Rate” shall mean the per annum percentage rate for determination of the
Price Differential, which initial rate shall be specified in the Term Sheet,
subject to subsequent periodic adjustments as provided for in the Term Sheet;

 

5

 

(ss)                    “Prime Rate” shall
mean the prime rate of U.S. money center commercial banks as published in The Wall Street Journal, Western edition or, if more than
one such rate is published, the average of such rates;

 

(tt)                        “Purchase
Commitment” shall mean a written commitment by an Approved Takeout Investor
to purchase from the relevant Seller a Mortgage Loan that is the subject of a
Transaction;

 

(uu)                  “Purchase Date” shall
mean the date with respect to each Transaction on which Purchased Eligible
Loans are to be transferred by the relevant Seller to Buyer hereunder;

 

(vv)                  “Purchase Price”
shall mean, subject to Paragraph 3(c) hereof, (i) on the Purchase
Date, the price at which Purchased Eligible Loans are sold by the relevant
Seller to Buyer hereunder, and (ii) thereafter, except where Buyer and the
relevant Seller agree otherwise, such price decreased by the amount of any cash
transferred by any Seller to Buyer pursuant to Paragraph 3(c) hereof and
pursuant to the Term Sheet; provided, however,
that the Purchase Price for any Purchased Eligible Loan shall not exceed ninety
five-percent (95%) of the original unpaid principal balance of the Eligible
Loan (subject in all events to the sublimits set forth in the Term Sheet); further  provided, however,
that each Seller and Buyer hereby acknowledge and agree that the Purchase Price
is inclusive of (and reflects a premium paid by Buyer) for the purchase of the
Servicing Rights in connection with the Purchased Eligible Loans;

 

(ww)              “Purchased Eligible Loans”
shall mean the Eligible Loans sold by the relevant Seller to Buyer in a
Transaction hereunder.  The term “Purchased
Eligible Loans” with respect to any Transaction at any time also shall include
Additional Purchased Eligible Loans delivered pursuant to Paragraph 4(a)
hereof;

 

(xx)                      “Repurchase
Date” shall mean the date on which the relevant Seller is required to
repurchase the Purchased Eligible Loans from Buyer, calculated in accordance
with the Term Sheet, which Repurchase Date shall in no event be later than the
Termination Date;

 

(yy)                  “Repurchase Price”
shall mean the price at which a Purchased Eligible Loans is to be resold by
Buyer to the relevant Seller upon termination of the Transaction for such Purchased
Eligible Loan, which Repurchase Price in each case (including, without
limitation, Transactions terminable upon demand) shall equal the sum of the
Purchase Price and the unpaid Price Differential as of the Repurchase Date for
such Purchased Eligible Loan;

 

(zz)                      “RESPA”
means the Real Estate Settlement Procedures Act, as amended from time to time.

 

(aaa)              “Servicer” shall
mean, collectively, with respect to each Purchased Eligible Loan, any Person
who is primarily responsible for performing the servicing functions for such
Purchased Eligible Loan and is identified in a RESPA notification letter as the
Person to whom the related mortgagor sends scheduled loan payments.  Notwithstanding that another Person may perform
servicing obligations, each Seller expressly acknowledges and agrees that the
purchase by Buyer of Eligible Loans hereunder shall include all Servicing
Rights

 

(bbb)           “Servicing Records”
shall have the meaning set forth in Paragraph 11(a) hereof.

 

6

 

(ccc)              “Servicing Rights”
shall mean contractual, possessory or other rights of any Person, whether
arising hereunder or under a servicing agreement, a subservicing agreement, the
Custodial Agreement or otherwise, to administer, service or subservice a
Purchased Eligible Loan or to possess related Servicing Records.

 

(ddd)           “Settlement Account”
and “Settlement Accounts” shall have the meaning set forth in the Term
Sheet;

 

(eee)              “Subservicer” shall
mean, collectively, with respect to each Purchased Eligible Loan, any Person
who is primarily responsible for performing the subservicing functions for such
Mortgage Loan and is identified in a RESPA notification letter as the Person to
whom the related mortgagor sends scheduled loan payments.  Notwithstanding that another person may
perform subservicing obligations, each Seller expressly acknowledges and agrees
that the purchase by Buyer of Eligible Loans hereunder shall include all
Servicing Rights;

 

(fff)                    “Synergy Operating
Account” shall have the meaning set forth in the Term Sheet.

 

(ggg)           “Synergy Settlement
Account” shall have the meaning set forth in the Term Sheet.

 

(hhh)           “Tangible Net Worth”
shall mean, with respect to any Person, the excess of the total assets of such
Person over the total liabilities of such Person determined in accordance with
GAAP, but excluding from the determination of total assets:  (a) all assets which would be classified as
intangible assets under GAAP including, without limitation, goodwill (whether
representing the excess cost over book value of assets acquired or otherwise),
patents, trademarks, trade names, copyrights, franchises and deferred charges
(including, without limitation, unamortized debt discount and expense,
organization costs and research and product development costs), (b) loans to,
accounts receivable from or other extensions of credit to officers, employees,
shareholders or affiliates of such Person (to the extent not otherwise
eliminated in consolidation), and (c) investments in subsidiaries of such
Person;

 

(iii)                       “Term Sheet”
shall mean the term sheet substantially in the form attached hereto as Annex
I hereto, as executed by and between Buyer and Sellers, which is
incorporated herein by reference;

 

(jjj)                       “Termination
Date” shall mean June 20, 2011 or such earlier date on which this
Agreement shall terminate or be terminated in accordance with the provisions
hereof (including without limitation the provisions of Paragraph 10
hereof) or by operation of law;

 

(kkk)              “Transaction” shall
have the meaning set forth in Paragraph 1 of this Agreement;

 

(lll)                       “Transaction
Documents” shall mean this Agreement (including, without limitation, the
Term Sheet made a part hereof), the Custodial Agreement, the Guaranty, the
Pledge Agreement and any other documents and agreements entered into in
connection with any of the foregoing;

 

(mmm)     “Transaction Request”,
the document incorporating the relevant Seller’s request to initiate a
Transaction and Buyer’s approval of such request, in the form of Exhibit A-1
hereto;

 

7

 

(nnn)           “VA” shall mean the
United States Department of Veterans Affairs; and

 

(ooo)           “Wet Funded Mortgage Loan”
shall mean an Eligible Mortgage Loan for which the documents described in Exhibit A-2
hereto have been delivered to Buyer on or prior to the Purchase Date in
conjunction with a Transaction Request as described in Exhibit A-1
hereto.

 

3.                                      Initiation;
Transaction Request; Repurchase; Delivery of Wet Funding Documents; Custodial
Duties of Buyer

 

(a)                          If a Seller
desires to enter into a Transaction hereunder, that Seller shall deliver to
Buyer prior to 12:00 p.m., Los Angeles time, one (1) Business Day prior to the
proposed Purchase Date, a Transaction Request in the form of Exhibit A-1
hereto.  Provided that the Mortgage Loans
listed on the Transaction Request are Eligible Loans, Buyer shall confirm its
acceptance of the proposed Transaction and shall proceed to fund the
Transaction and purchase such Eligible Loan by wire transfer of funds to the
account of the Closing Agent designated by the relevant Seller, provided that:

 

(i)                                     With respect to any Dry
Funded Mortgage Loan, the relevant Seller has delivered to the Custodian the
documents identified in Paragraph I of Exhibit A-2 hereto with respect
to such Eligible Loan and (if a third-party custodian is then in place) the
Custodian has issued a trust receipt with respect thereto; and

 

(ii)                                  With respect to any Wet
Funded Mortgage Loan, the relevant Seller has delivered to the Custodian the
Documents identified in Paragraph II of Exhibit A-2 hereto with respect
to such Eligible Loan and (if a third-party custodian is then in place) the
Custodian has issued a trust receipt with respect thereto.

 

(b)                         The relevant
Seller shall repurchase each Purchased Eligible Loan on its respective
Repurchase Date.

 

(c)                          Each
Transaction shall be subject to any Sublimits set forth in the Term Sheet as
calculated with respect to all Transactions hereunder.  To the extent that as of any Determination
Date any of the Sublimits set forth in the Term Sheet have been exceeded (each,
an “Excess Purchase Price”), then Buyer by notice to the relevant Seller
(which notice may be telephonic or by email) may require that Seller to pay
Buyer cash in an amount at least equal to such Excess Purchase Price, in which
case such cash shall be paid to Buyer no later than the close of business in
Los Angeles on the next Business Day immediately following the date of such
notice.  Such a cash payment received by
Buyer shall be applied as a partial payment of the Repurchase Price.

 

(d)                         With respect to
any Wet Funded Mortgage Loan, the relevant Seller shall deliver to the
Custodian all documents identified in Paragraph I of Exhibit A-2 no
later than four (4) Business Days after the related Purchase Date.

 

(e)                          So long as Buyer
is the Custodian, Buyer agrees as follows:

 

(i)                                     Buyer shall maintain
continuous custody of all items constituting the Mortgage Documents in secure
facilities in accordance with customary standards for such custody.  Buyer shall issue a receipt to the relevant
Seller for each Mortgage Document that it 

 

8

 

receives
from or on behalf of such Seller.  Each
Note (and Assignment of Mortgage, if applicable) shall be maintained in fire
resistant facilities.  Buyer shall, upon
receipt of a written request from the relevant Seller, release Mortgage
Documents in the possession of Buyer to an Approved Takeout Investor.  The request for release shall indicate the
Purchased Eligible Loans to be sold, such information to be provided in an
electronic medium acceptable to Buyer, the approximate amount of sale proceeds
such Seller anticipates receiving, the date of such anticipated sale, the name
and address of the Approved Takeout Investor and the required method and date of
delivery.  Any transmittal of Mortgage
Documents in the possession of Buyer in connection with the sale thereof to an
Approved Takeout Investor will be under cover of a bailee letter substantially
in the form attached hereto as Exhibit E, duly completed and executed by
Buyer.  Promptly upon receipt by Buyer of
the full amount of the takeout proceeds into the account set forth in the
bailee letter, Buyer will notify the relevant Seller thereof in writing.  Any takeout proceeds sent by an Approved
Takeout Investor shall be sent to the Excel Settlement Account or the Synergy
Settlement Account, as appropriate. 
Buyer agrees to reimburse, indemnify and hold each Seller and its
directors, officers, agents and employees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs or out-of-pocket expenses of any kind or nature whatsoever,
including reasonable attorney’s fees, that may be imposed on, incurred by, or
asserted against it or them in any way relating to the loss by Buyer of any
Mortgage Document for which Buyer has provided Seller a receipt.

 

4.                                      Representation
and Warranty Breach Repurchase

 

(a)                          Upon discovery
by any Seller of a breach of any of the representations and warranties set
forth on Exhibit B to this Agreement, such Seller shall give prompt
written notice thereof to Buyer.  Each
Seller and Buyer understand and agree that each and every one of the
representations and warranties set forth in Exhibit B hereto with
respect to the Purchased Eligible Loans shall survive delivery of the
respective Mortgage Documents to the Custodian and shall inure to the benefit
of Buyer.  The fact that Buyer has
conducted or has failed to conduct any partial or complete due diligence
investigation in connection with its purchase of any Purchased Eligible Loan
shall not affect Buyer’s right to demand repurchase any or all Purchased
Eligible Loans as provided under this Agreement.  With respect to any Purchased Eligible Loan,
the Sellers shall, within two (2) Business
Days after the earlier of any Seller’s discovery of or receiving notice
with respect to (i) any breach of a representation or warranty contained
in Exhibit B hereto, or (ii) any failure to deliver any of the
items required to be delivered as part of the Mortgage Documents within the
time period required for delivery pursuant to the Custodial Agreement, promptly
cure such breach or delivery failure in all material respects.  Within two (2) Business Days after the earlier of any Seller’s discovery
of such breach or delivery failure or any Seller receiving notice thereof, if
such breach or delivery failure has not been remedied, the relevant Seller
shall promptly upon receipt of written instructions from Buyer repurchase such
Purchased Eligible Loan at a purchase price equal to the Repurchase Price with
respect to such Purchased Eligible Loan by wire transfer to the Excel
Settlement Account or the Synergy Settlement Account, as appropriate.

 

5.                                      Payments
of Price Differential; Income Payments

 

(a)                          On each Payment
Date each Seller shall pay to Buyer all accrued but unpaid Price Differential
on its Transactions for the preceding calendar month.

 

9

 

(b)                         When a
particular Transaction’s term extends over an Income payment date on the
Purchased Eligible Loans subject to that Transaction, all payments and
distributions, whether in cash or in kind, made on or with respect to the
Purchased Eligible Loans shall, unless otherwise mutually agreed by Buyer and
each Seller and so long as no Event of Default on the part of any Seller shall
have occurred and be continuing, be retained by the relevant Seller, in its
capacity as the Subservicer, upon receipt from the related Mortgagor.  All such Income amounts shall be held by each
Seller for the benefit of, and in trust for, Buyer.  Notwithstanding anything to the contrary
contained herein, each Seller shall immediately pay over to Buyer all partial
or full prepayments of principal by a Mortgagor.

 

6.                                      Security
Interest

 

Although
the parties intend that all Transactions hereunder be sales and purchases and
not loans, in the event any such Transactions are deemed to be loans, each
Seller shall be deemed to have pledged, and hereby does pledge, to Buyer as
security for the performance by each Seller of its obligations under each such
Transaction, and all of each Seller’s payment and performance obligations under
the Transaction Documents, and shall be deemed to have granted, and hereby does
grant, to Buyer a security interest in, all of such Seller’s now existing or
hereafter acquired or arising right, title and interest in, to and under the
Purchased Eligible Loans with respect to all Transactions hereunder and all
related (i) loan documents, files and records of the mortgagee for such Mortgage
Loan, (ii) Income, any prepayments, insurance and other proceeds,
(iii) Servicing Rights and other rights to service or subservice such
Mortgage Loan and the proceeds thereof, and (iv) other rights, interests,
benefits, security, proceeds, remedies, claims and covenants of the lender or
mortgagee arising from or in connection with such Mortgage Loan.  In connection with such security interest,
each Seller hereby authorizes Buyer to file any financing or continuation
statement under the applicable Uniform Commercial Code (without the signature
of any Seller) as Buyer may deem appropriate, and appoints Buyer as such Seller’s
attorney-in-fact in accordance with Paragraph 17 hereof to (a) authenticate any
such financing statement or statements in such Seller’s name and (b) take such
other actions as Buyer deems necessary or appropriate to perfect and continue
the security interest granted hereby and to protect, preserve and realize upon
the same (provided that Buyer will provide each Seller with notice of Buyer’s
exercise of this power of attorney within five (5) Business Days after the
exercise thereof).  Each Seller hereby
covenants, jointly and severally, to pay all customary fees and expenses
associated with perfecting such security interest including, without
limitation, the cost of filing financing and continuation statements under the
Uniform Commercial Code and recording assignments of mortgage as and when
required by Buyer in its sole discretion. 
This Agreement shall constitute a security agreement, and Buyer shall
have all of the rights of a secured party under applicable law and each of each
Seller represents and warrants as to itself that each remittance of amounts by
a Seller to Buyer under this Agreement will have been (x) in payment of a debt
incurred by such Seller in the ordinary course of business or financial affairs
of Seller and (y) made in the ordinary course of business or financial
affairs of such Seller.

 

7.                                      Payment
and Transfer

 

Unless
otherwise mutually agreed, all transfers of funds hereunder shall be in
immediately available funds.  All
Eligible Loans transferred by one party hereto to the other party shall be
transferred (a) by notice to the Custodian to the effect that the
Custodian is now

 

10

 

holding
for the benefit of Buyer all documents and assignment forms delivered to it
under the Custodial Agreement and (b) in the case of loans that are
registered on MERS, by notice to MERS, in accordance with MERS procedures.

 

8.                                      Segregation
of Documents Relating to Purchased Eligible Loans

 

All
Mortgage Documents and other files and records relating to Purchased Eligible
Loans in the possession of any Seller or its designee shall be segregated from
other documents and securities in the possession of such Seller or its designee
and shall be identified as being owned by Buyer and subject to this
Agreement.  Segregation may be
accomplished by appropriate identification of ownership on the books and
records of the holder, including a financial or securities intermediary or a
clearing corporation.  Each Seller shall
mark its master data processing records to indicate which of the Mortgage Loans
constitute Purchased Eligible Loans.  All
right, title and interest of each and every Seller in the Purchased Eligible
Loans, including without limitation all Servicing Rights, shall pass to Buyer
on the Purchase Date and nothing in this Agreement shall preclude Buyer from
engaging in repurchase transactions with the Purchased Eligible Loans or
otherwise selling, transferring, pledging or hypothecating the Purchased
Eligible Loans, but no such transaction shall relieve Buyer of its obligations
to transfer Purchased Eligible Loans to the relevant Seller pursuant to
Paragraphs 3, 4 or 10 hereof, or of Buyer’s obligation to credit or pay
Income actually received by Buyer to, or apply Income actually received by
Buyer to the obligations of, the relevant Seller pursuant to Paragraph 5
hereof.

 

9.                                      Representations,
Warranties and Covenants

 

(a)                          Each Seller,
jointly and severally as to all Sellers, and Buyer each represent and warrant,
and shall on and as of the Purchase Date of any Transaction be deemed to
represent and warrant, to the other that:

 

(i)                                     it is duly authorized to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party, to enter into the Transactions contemplated hereunder and to
perform its obligations hereunder and has taken all necessary action to
authorize such execution, delivery and performance;

 

(ii)                                  it will engage in such Transactions
as principal (or, if agreed in writing in advance of any Transaction by the
other party hereto, as agent for a disclosed principal);

 

(iii)                               the Person signing this
Agreement and the other Transaction Documents to which it is a party on its
behalf is duly authorized to do so on its behalf (or on behalf of any such
disclosed principal);

 

(iv)                              it has obtained all
authorizations of any governmental body required in connection with this
Agreement, the other Transaction Documents and the Transactions hereunder and
thereunder and such authorizations are in full force and effect; and

 

(v)                                 the execution, delivery and
performance of this Agreement, the other Transaction Documents and the
Transactions hereunder and thereunder will not violate any law, 

 

11

 

ordinance,
charter, by-law or rule applicable to it or any agreement by which it is
bound or by which any of its assets are affected.

 

(b)                         Each Seller
represents and warrants to Buyer, and shall on and as of the Purchase Date of
any Transaction be deemed to represent and warrant, jointly and severally, as
follows:

 

(i)                                     The documents disclosed
and/or delivered by each Seller to Buyer pursuant to this Agreement or any
other Transaction Documents are either original documents or genuine and true
copies thereof;

 

(ii)                                  Each Seller is a separate
and independent corporate or other entity from the Custodian, no Seller does
owns a controlling interest in the Custodian either directly or through
affiliates and no director or officer of any Seller is also a director or
officer of the Custodian;

 

(iii)                               None of the Purchase Price
for any Eligible Loan will be used either directly or indirectly to acquire any
security, as that term is defined in Regulation T of the Regulations of the
Board of Governors of the Federal Reserve System, and no Seller has taken any
action that might cause any Transaction to violate any regulation of the
Federal Reserve Board;

 

(iv)                              Each Eligible Loan was
underwritten and originated by an Approved Originator, and each Eligible Loan
was underwritten in accordance with the written underwriting standards of such
Approved Originator, which have been furnished by the relevant Seller to Buyer,
and no change to such underwriting standards has occurred since the date that
the last written revision to such standards was furnished to Buyer by the
relevant Seller;

 

(v)                                 Each Seller shall be at the
time it transfers to Buyer any Eligible Loans for any Transaction the legal and
beneficial owner of such Eligible Loans, free and clear of any lien, security
interest, option or encumbrance; and

 

(vi)                              No Seller has
used any selection procedures that identified the Eligible Loans relating to a
Transaction as being less desirable or valuable than other comparable assets in
such Seller’s portfolio on the related Purchase Date.

 

(vii)                           Neither any Seller, nor Guarantor, nor any of their respective officers,
directors, shareholders, partners, members or affiliates (including the
indirect holders of equity interests in any Seller) is or will be an entity or
person:  (a) that is listed in the Annex to, or is otherwise
subject to the provisions of Executive Order 13224 issued on September 24,
2001 (“EO13224”); (b) whose
name appears on the United States Treasury Department’s Office of Foreign
Assets Control (“OFAC”) most current list of “Specifically Designated
National and Blocked Persons” (which list may be published from time to time in
various mediums including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf); (c) who commits, threatens to commit or supports “terrorism”, as that term is
defined in EO13224; or (d) who is
otherwise affiliated with any entity or person listed above (any and all
parties or persons described in clauses (a) through (d) above are
herein referred to as a “Prohibited Person”).  Each covenants and agrees that neither such
Seller, nor Guarantor, nor any of their respective officers, directors,
shareholders, partners, members or affiliates (including the indirect holders
of equity 

 

12

 

interests in such Seller) will:  (x) conduct any business, or engage in any transaction or
dealing, with any Prohibited Person, including, but not limited to, the making
or receiving of any contribution of funds, goods, or services, to or for the
benefit of a Prohibited Person; or (y) engage in or conspire to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in EO13224.  Each
Seller further covenants and agrees to deliver (from time to time) to Buyer any
such certification or other evidence as may be requested by Buyer in Buyer’s
sole and absolute discretion, confirming that: 
(i) neither such Seller, nor
any Guarantor, nor their respective officers, directors, shareholders,
partners, members or affiliates (including the indirect holders of equity
interests in any Seller) is a Prohibited Person; and (ii) neither such Seller, nor any Guarantor, nor their respective
officers, directors, shareholders, partners, members or affiliates (including
the indirect holders of equity interests in such Seller) has engaged in any
business, transaction or dealings with a Prohibited Person, including, but not
limited to, the making or receiving of any contribution of funds, goods, or
services, to or for the benefit of a Prohibited Person.

 

(viii)                        Except as otherwise disclosed in the financial statements of the Sellers
and Guarantor delivered to Buyer prior to the date of this Agreement, there is
no action, proceeding or investigation by or before any court, governmental or
administrative agency or arbitrator affecting any of the Purchased Eligible
Loans, any Seller, Guarantor or any of their affiliates, pending or threatened,
which is reasonably likely to be adversely determined and which, if adversely
determined would have a reasonable likelihood of having a Material Adverse
Effect.

 

(ix)                                The financial statements of Sellers and Guarantor, copies of which have
been furnished to Buyer, (A) are, as of the dates and for the periods
referred to therein, complete and correct in all material respects,
(B) present fairly in all material respects the financial condition and
results of operations of Sellers and Guarantor as of the dates and for the
periods indicated, and (C) have been prepared in accordance with GAAP
consistently applied, except as noted therein (subject as to interim statements
to normal year-end adjustments).  Since
the date of the most recent financial statements, there has been no Material
Adverse Effect with respect to any Seller or Guarantor.  Except as disclosed in such financial
statements, neither any Seller nor Guarantor is subject to any contingent
liabilities or commitments that, individually or in the aggregate, have a
reasonable likelihood of causing a Material Adverse Effect with respect to such
Seller or Guarantor.

 

(x)                                   None of the documents or information prepared by or on behalf of any
Seller or Guarantor and provided by such Seller or Guarantor  to Buyer relating to such Seller’s or Guarantor’s financial
condition contain any statement of a material fact with respect to any Seller
or Guarantor or the Transactions that was untrue or misleading in any material
respect when made in light of the circumstances then existing.  Since the furnishing of such documents or
information, there has been no change, nor any development or event involving a
prospective change known to any Seller or Guarantor, that would render any of such
documents or information untrue or misleading in any material respect.

 

(xi)                                Each Seller and Guarantor is each solvent and no Seller nor Guarantor will
be rendered insolvent by the Transactions and, after giving effect to each such
Transaction, neither any Seller nor Guarantor will be left with an unreasonably
small amount of capital with 

 

13

 

which to engage its business. 
Neither any Seller nor Guarantor intends to incur, nor believes that it
has incurred, debts beyond its ability to pay such debts as they mature.  Neither any Seller nor Guarantor is
contemplating the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of such Seller or Guarantor
or any of their assets.  No Seller is
transferring any Purchased Eligible Loan with any intent to hinder, delay or
defraud any of its creditors.

 

(xii)                             Each Seller and Guarantor has each filed all federal and state tax returns
which are required to be filed and paid all taxes, including any assessments
received by it, to the extent that such taxes have become due (other than for
taxes that are being contested in good faith or for which it has established
adequate reserves).  Any taxes, fees and
other governmental charges payable by any Seller or Guarantor in connection
with a Transaction shall be paid by the relevant Seller or Guarantor when due.

 

(c)                          Each Seller,
jointly and severally, makes the representations and warranties set forth in Exhibit B
hereto with respect to each Eligible Loan, both as of the related Purchase Date
and as of the date of each Transaction hereunder.  Further, as of each Purchase Date, each
Seller shall be deemed to have represented and warranted, jointly and
severally, in like manner that such Seller has
no knowledge that any such representation or warranty either has ceased or is
reasonably likely to cease to be true in a material respect as of such date,
except as otherwise stated in a Transaction Request (any such exception to
identify the applicable representation or warranty and specify in reasonable
detail the related knowledge of such Seller).  The representations and warranties set forth
in Exhibit B hereto are intended to supplement and be consistent
with the Term Sheet, but in the event of any conflict between the terms of Exhibit B
hereto and the Term Sheet, the Term Sheet shall prevail.

 

(d)                         Each Seller
acknowledges that Buyer has the right to perform continuing loan level due
diligence reviews with respect to the Eligible Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and each Seller agrees that upon at least one (1) Business
Day’s prior notice to the relevant Seller, Buyer or its authorized
representatives will be permitted timely and reasonable access to examine,
inspect, and make copies and extracts of, the related mortgage loan files and
any and all documents, records, agreements, instruments or information relating
to such Eligible Loans in the possession or under the control of any Seller,
the Subservicer or the Custodian.  Each
Seller also shall make available to Buyer a knowledgeable financial or
accounting officer for the purpose of answering questions respecting the
mortgage loan files and the Eligible Loans. 
Without limiting the generality of the foregoing, each Seller
acknowledges that Buyer may purchase Eligible Loans from such Seller based
solely upon the information provided by such Seller to Buyer in the Transaction
Request and the representations, warranties and covenants contained herein, and
that Buyer, at its option, has the right at any time to conduct a partial or
complete due diligence review on some or all of the Eligible Loans prior to or
following their purchase in a Transaction, including without limitation
ordering new credit reports and new appraisals on the property securing the
related Mortgage and otherwise re-generating the information used to originate
such Eligible Loan.  Buyer may conduct
the due diligence review of such Eligible Loans itself or engage a third party
underwriter selected by Buyer to perform such review.  Each Seller agrees to, and to cause the
Subservicer to, cooperate with Buyer and 

 

14

 

any third party underwriter in connection with such
due diligence review, including without limitation providing Buyer and any
third party underwriter with access to any and all documents, records,
agreements, instruments or information relating to such Eligible Loans in the
possession, or under the control, of any Seller or the Subservicer.  Notwithstanding any provision to the contrary
herein regarding reasonable prior notice, if an Event of Default by any Seller
shall have occurred and be continuing, then Buyer, upon notice to Sellers,
shall have the right to immediate access and review of each Seller and the loan
information contemplated in this Paragraph 9(d), provided that to the
extent that a Seller does not have possession of such loan information, such
Seller shall cause the applicable Subservicer to provide Buyer with access and
review of such loan information within a reasonable period of time, but not to
exceed any prior notification time provided under the related servicing agreement
with such Subservicer.  Pursuant to
Paragraph 14 hereof, Sellers hereby covenant, jointly and severally, to
pay all costs and expenses incurred by Buyer in connection with Buyer’s due
diligence review of any Eligible Loans and promptly reimburse Buyer upon its
request for such payment.

 

(e)                          Sellers shall
comply at all times with the financial covenants set forth in the Term Sheet.

 

(f)                            Each Seller
covenants with Buyer, from and after the date hereof, as follows:

 

(i)                                     Sellers shall promptly, but
no later than the end of the Business Day, notify Buyer if an Event of Default
by any Seller shall have occurred;

 

(ii)                                  No Seller shall make future
advances on a Note to the related Mortgagor;

 

(iii)                               No Seller will directly or
indirectly use any of the proceeds from the sale of the Eligible Loans, or
lend, contribute or otherwise make available any such proceeds to any
subsidiary, joint venture partner or other Person, for the purpose of financing
the activities of any Person that is subject to sanctions under any program
administered by the Office of Foreign Assets Control of the United States
Department of the Treasury, including without limitation those implemented by
regulations codified in Subtitle B, Chapter V, of Title 31, Code of Federal
Regulations; and

 

(iv)                              Each Seller shall provide
Buyer access to Sellers’ internet site
ftp://ftp.impaccompanies.com/Outbound/BackFeed/MISC/EastWest/, subject to Buyer’s
agreement to (A) maintain the confidentiality of all information contained
therein and (B) not to utilize the website for any purpose other than due
diligence and monitoring with respect to Purchased Eligible Loans.

 

10.                               Events
of Default

 

(a)                          The following
events shall constitute events of default (each an “Event of Default”)
hereunder with respect to all Sellers:

 

(i)                                     Any Seller fails to
repurchase Purchased Eligible Loans on the applicable Repurchase Date pursuant
to the terms hereof or to pay Price Differential as and when due;

 

(ii)                                  Any Seller fails to comply
with Paragraph 4 hereof;

 

15

 

(iii)                               Any Seller fails to pay any
amount due and payable hereunder or under any other Transaction Document and
not referenced in subparagraphs 10(a)(i) and 10(a)(ii) above within
five (5) Business Days after the due date thereof or if such fee, expense
or other amount due does not have a due date, within five (5) Business
Days after the written request by Buyer of such payment;

 

(iv)                              An Act of Insolvency occurs
with respect to any Seller or Guarantor;

 

(v)                                 Any representation or
warranty made by any Seller shall have been incorrect or untrue in any material
respect when made or repeated or deemed to have been made or repeated; provided, however, that in the case of representations and
warranties made with respect to the Purchased Eligible Loans as set forth in
Paragraph 9(c) hereof, such circumstance shall not constitute an
Event of Default, unless such incorrect representation or warranty was made
knowingly and intentionally by such Seller, but shall be used solely for the
purpose of determining whether the relevant Mortgage Loan is an Eligible Loan;

 

(vi)                              Any Seller shall breach any
covenant contained herein or in any other Transaction Document in any material
respect and shall fail to cure such breach within five (5) Business Days
after the earlier of (A) discovery of such breach by Seller or
(B) written notice of such breach from Buyer to Sellers;

 

(vii)                           At any time after any Seller
becomes a Fannie Mae, Freddie Mac or Ginnie Mae eligible originator, seller
and/or servicer such Seller loses that eligibility or any Governmental
Authority cancels any of such Seller’s right to be an originator, seller or
servicer of Mortgage Loans (other than in each case by virtue of a voluntary
surrender of such eligibility or right without any investigation or charges
pending or threatened and following not less than ten (10) days prior
notice to Buyer of such Seller’s intent to so surrender);

 

(viii)                        Failure of any Seller to
correct an imbalance in any escrow account established with such Seller,
Servicer or Subservicer as either an originator, purchaser or servicer of
Mortgage Loans, which imbalance may have a Material Adverse Effect, within five
(5) Business Days after demand by any beneficiary of such account or by
Buyer;

 

(ix)                                Failure of any Seller to
meet, at all times, the minimum net worth requirements of Fannie Mae, Freddie
Mac or Ginnie Mae as an originator, seller or servicer, as applicable, to the
extent such Seller is required to satisfy such requirements;

 

(x)                                   The occurrence of any event
that would have a Material Adverse Effect on the enforceability or
collectability of any significant portion of the Purchased Eligible Loans, the
ability of any Seller to perform hereunder or the financial condition or
business of any Seller from and after the date hereof;

 

(xi)                                Buyer shall cease to have a
valid and perfected first lien priority security interest in the Purchased
Eligible Loans (together with each of the other assets granted to Buyer
pursuant to Paragraph 6 hereof) unless such cessation is due to an act or
omission of Buyer;

 

(xii)                             The aggregate Tangible Net
Worth of Sellers and Guarantor on a consolidated basis shall be less than
Seventeen Million Dollars ($17,000,000);

 

16

 

(xiii)                          The aggregate amount of cash
or cash equivalents (inclusive of the funds on deposit in the Cash Collateral
Account and the Operating Accounts) maintained or held on deposit by Sellers
and Guarantor shall be less than Five Million Dollars ($5,000,000);

 

(xiv)                         Buyer shall have determined
in its reasonable discretion that any Seller is or will be unable to meet its
commitments under this Agreement or the other Transaction Documents, shall have
notified Sellers of such determination, and Sellers shall not have responded
with appropriate information to the contrary to the satisfaction of Buyer in
Buyer’s sole discretion within five (5) Business Days following the date
of such notification;

 

(xv)                            Either (A) this
Agreement and the other Transaction Documents shall for any reason not cause,
or shall cease to cause, Buyer to be the owner of all Notes for the Purchased
Eligible Loans or, if recharacterized as a secured financing, a secured party
with respect to all Notes for the Purchased Eligible Loans, in each case free
of any adverse claim, liens and other rights of others (other than as granted
or expressly disclosed herein), or (B) if a Transaction is recharacterized
as a secured financing, this Agreement and the other Transaction Documents with
respect to such Transaction shall for any reason cease to create a valid first
priority security interest in favor of Buyer in all of the Notes for the
related Purchased Eligible Loans, or (C) if this Agreement or any other
Transaction Document shall cease to be in full force and effect or if its
enforceability is challenged by or on behalf of any Seller;

 

(xvi)                         A final judgment by any
competent court in the United States of America for the payment of money in an
amount of at least $1,000,000 is rendered against any Seller, and the same
remains undischarged for a period of thirty (30) days during which execution of
such judgment is not effectively stayed;

 

(xvii)                      Any event of default shall
occur and be continuing under any repurchase or other financing agreement for
borrowed funds or indenture for borrowed funds by which any Seller is bound or
affected shall occur and be continuing;

 

(xviii)                   In the judgment of Buyer in its reasonable
discretion a material adverse change shall have occurred in the business,
operations, properties or financial condition of any Seller;

 

(xix)                           A breach by Guarantor of any
material representation, warranty or covenant set forth in the relevant
Guaranty or any other Transaction Document, any “event of default” by Guarantor
under the Guaranty, any repudiation of the Guaranty by Guarantor, or if the
Guaranty is not enforceable against Guarantor;

 

(xx)                              Any Seller shall fail to
promptly notify Buyer of (A) the acceleration of any debt obligation or
the termination of any credit facility of such Seller; (B) the amount and
maturity of any such debt assumed after the date hereof; (C) any adverse
developments with respect to pending or future litigation involving any Seller;
and (D) any other developments that might materially and adversely affect
the business, operations, properties or condition (financial or otherwise) of
any Seller; or

 

(xxi)                           Any Seller shall have failed
to comply in any material respect with its obligations under any other
Transaction Document.

 

17

 

(b)                         If an Event of
Default shall have occurred and be continuing, then, at Buyer’s option,
exercised by written notice to Sellers, the Repurchase Date for any or all
Transactions hereunder shall be deemed immediately to occur; provided that upon the occurrence of an Act of Insolvency
such option shall be deemed to have been exercised immediately without the
giving of any notice.

 

(c)                          Upon the
exercise by Buyer of the option referred to in subparagraph (b) above of
this Paragraph 10, (i) all of Sellers’ obligations hereunder to
repurchase all Purchased Eligible Loans in such Transactions shall thereupon
become immediately due and payable, (ii) to the extent permitted by
applicable law, the Repurchase Price with respect to each such Transaction shall
be increased by the aggregate amount obtained by daily application of
(x) the greater of the Pricing Rate for such Transaction and the Prime
Rate to (y) the Repurchase Price for such Transaction as of the Repurchase
Date as determined pursuant to subparagraph (b) of this Paragraph 10
(decreased as of any day by (A) any amounts retained by Buyer with respect
to such Repurchase Price pursuant to clause (iii) of this
subparagraph, (B) any proceeds from the sale of Purchased Eligible Loans
pursuant to subparagraph (d)(i) below of this Paragraph 10, and
(C) any amounts credited to the account of the relevant Seller pursuant to
subparagraph (d)(ii) below of this Paragraph 10) on a 360 day per
year basis for the actual number of days during the period from and including
the date of the Event of Default giving rise to such option to but excluding
the date of payment of the Repurchase Price as so increased, (iii) all
Income paid after such exercise or deemed exercise shall be payable to and
retained by Buyer and applied to the aggregate unpaid Repurchase Prices owed by
Sellers, and (iv) Sellers shall immediately deliver or cause the Custodian
to deliver to Buyer any documents relating to Purchased Eligible Loans subject
to such Transactions then in any Seller’s possession.

 

(d)                         Upon the
occurrence of an Event of Default, Buyer, without prior notice to any Seller,
may (i) immediately sell on a servicing retained basis, in a recognized
market at such price or prices as Buyer may in its sole discretion deem
satisfactory, any or all Purchased Eligible Loans subject to such Transactions
and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and
any other amounts owing by Sellers hereunder or (ii) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased
Eligible Loans, to give the relevant Seller credit for such Purchased Eligible
Loans in an amount equal to the fair market value thereof on such date against
the aggregate unpaid Repurchase Prices and any other amounts owing by Sellers hereunder.  Notwithstanding anything contained in this
Agreement or the other Transaction Documents to the contrary, each Seller and
Buyer hereby recognize that it may not be possible to purchase or sell all of
the Purchased Eligible Loans on a particular Business Day, or in a transaction
with the same purchaser, or in the same manner because the market for such
Purchased Eligible Loans may not be liquid at such time.  In view of the nature of the Purchased
Eligible Loans, each Seller and Buyer hereby agree that the liquidation of a
Transaction or the underlying Purchased Eligible Loans does not require public
purchase or sale and that a good faith private purchase or sale shall not be
deemed to have been made in a commercially unreasonable manner solely as a result
of there not being a public sale. 
Accordingly, Buyer may elect the time and manner of liquidating any
Purchased Eligible Loan and nothing contained herein shall obligate Buyer to
liquidate any Purchased Eligible Loan on the occurrence of an Event of Default
or to liquidate all Purchased Eligible Loans in the same manner or on the same
Business Day and no such exercise of any right or remedy shall constitute a
waiver of any other right or remedy of Buyer.

 

18

 

(e)                          Sellers shall
be liable, jointly and severally, to Buyer for (i) the amount of all
reasonable legal or other costs and expenses incurred by Buyer in connection
with or as a result of an Event of Default, (ii) damages in an amount
equal to the cost (including without limitation all fees, expenses and
commissions) of entering into replacement transactions and entering into or
terminating hedge transactions in connection with or as a result of an Event of
Default and (iii) any other loss, damage, cost or expense directly arising
or resulting from the occurrence of an Event of Default in respect of a
Transaction.

 

(f)                            To the extent
permitted by applicable law, Sellers shall be liable, jointly and severally, to
Buyer for interest on any amounts owing by any Seller hereunder, from the date
any Seller becomes liable for such amounts hereunder until such amounts are
(i) paid in full by Sellers or (ii) satisfied in full by the exercise
of Buyer’s rights hereunder.  Interest on
any sum payable by Sellers to Buyer under this Paragraph 10(f) shall
be at a rate equal to the sum of four and one-half percent (4.50%) plus the
greater of the Pricing Rate for the relevant Transaction or the Prime Rate.

 

(g)                         Without
limiting Buyer’s rights under the Pledge Agreement and without notice to
Sellers (such notice being expressly waived), and without constituting a
retention of any collateral in satisfaction of an obligation (within the
meaning of the Uniform Commercial Code), set off and apply to the obligations
and indebtedness owed by Sellers to Buyer, in such order as Buyer shall
determine, any and all balances and deposits of each Seller held by Buyer in
the Cash Collateral Account and the Settlement Accounts.  Notwithstanding anything contained herein to
the contrary, in no event shall Buyer have any right of offset or set off or
any other claim to (i) balances and deposits of any Seller held by Buyer
in any account other than the Cash Collateral Account and the Settlement
Accounts, (ii) balances and deposits of Guarantor or any Affiliate of
Guarantor or any Seller and (iii) escrow balances and any other amounts
that are restricted or protected by any applicable law, rule or
regulation.

 

(h)                         Buyer shall
have, in addition to its rights hereunder, any rights otherwise available to it
under any other agreement, applicable law or in equity.

 

11.                               Servicing
of the Purchased Eligible Loans

 

(a)                          Notwithstanding
that at any time Sellers are acting as Seller and/or Subservicer and servicing
and/or subservicing the Purchased Eligible Loans, each Seller acknowledges and
agrees that Buyer is the owner of the Servicing Rights and all servicing and/or
subservicing records, including but not limited to any and all servicing and/or
subservicing agreements, files, documents, records, data bases, computer tapes,
copies of computer tapes, proof of insurance coverage, insurance policies,
appraisals, other closing documentation, payment history records, and any other
records relating to or evidencing the servicing or subservicing of such Mortgage
Loans (the “Servicing Records”). 
Each Seller covenants to maintain or cause the servicing and/or
subservicing of the Purchased Eligible Loans to be maintained in conformity
with Accepted Servicing Practices and pursuant to the related underlying
servicing and/or subservicing agreement. 
In the event that the preceding language is interpreted as constituting
one or more servicing and/or subservicing contracts, each such servicing and/or
subservicing contract shall terminate automatically upon the earliest of
(i) the termination thereof by Buyer pursuant to subparagraph (b) below
of this Paragraph 11, (ii) thirty (30) days after the 

 

19

 

Repurchase Date of such Purchased Eligible Loan,
(iii) a Default or an Event of Default, (iv) the date on which all
Sellers’ obligations hereunder have been paid in full, or (v) the transfer
of servicing and/or subservicing to any entity approved by Buyer and the
assumption thereof by such entity.  Upon
any such termination, each Seller shall promptly deliver and turn over to the
successor servicer and/or subservicer all Servicing Records and the physical
servicing of each Purchased Eligible Loan.

 

(b)                         Buyer shall
have the right, exercisable at any time in its sole discretion, upon written
notice, to terminate Sellers or any other Servicers as servicer and/or
Subservicers as subservicer, and to terminate any related servicing and/or
subservicing agreement.  Upon any such
termination, each Seller shall transfer or shall cause servicer and/or
subservicer to transfer such servicing and/or subservicing with respect to such
Purchased Eligible Loans to Buyer or its designee, (i) at no cost or
expense to Buyer if an Event of Default shall have occurred and be continuing
or if any Seller or Subservicer has breached its servicing obligations
hereunder and (ii) at the cost and expense of Buyer in any other
case.  Each Seller agrees to cooperate
with Buyer in connection with the transfer of servicing and/or subservicing
rights (together with the Servicing Records).

 

(c)                          From the
Purchase Date until the Repurchase Date, without the prior written consent of
Buyer, no Seller will have any right to modify or alter the terms of any
Purchased Eligible Loan or to consent to the modification or alteration of the
terms of any Purchased Eligible Loan.  No
Seller will have any obligation or right to take possession of any Purchased
Eligible Loan except as expressly allowed hereunder or by the Custodial
Agreement.

 

(d)                         Subservicer
shall be entitled to compensation for servicing the Loans in accordance with
the terms of the written agreement between Subservicer and each Seller.  Each Seller shall retain any servicing income
other than the compensation paid to Subservicer; provided that following
the occurrence and during the continuance of an Event of Default Buyer may
direct Subservicer to pay all such servicing income over to Buyer.

 

12.                               Single
Agreement

 

Buyer
and each Seller acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact
that, all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other.  Accordingly, each of Buyer and each Seller
agrees (a) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder, (b) that each of them shall be entitled to set off claims and
apply property held by them in respect of any Transaction against obligations
owing to them in respect of any other Transactions hereunder and (c) that
payments, deliveries and other transfers made by either of them in respect of
any Transaction shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries and other transfers
may be applied against each other and netted.

 

20

 

13.                               Notices
and Other Communications

 

Except
as otherwise expressly provided herein, all such notices, statements, demands
or other communications shall be in writing (including, without limitation,
facsimile or e-mail communication) or confirmed in writing and such notices and
other communications shall, when mailed, communicated by facsimile transmission
or e-mailed, be effective when received at the address for notices for the
party to whom such notice or communications is to be given as follows:

 

if
to Sellers:

 

Synergy
Capital Mortgage Corp.

Excel Mortgage Servicing, Inc.

19500 Jamboree Road

Irvine, CA  92612

Attention:  Kathy Hancock, Vice President
Treasury

Telephone:  949-475-3822

Facsimile:  949-475-3969

Email:  kathy.hancock@impaccompanies.com

 

with
a copy to:

 

Synergy
Capital Mortgage Corp.

Excel Mortgage Servicing, Inc.

19500 Jamboree Road

Irvine, CA  92612

Attention:  Ron Morrison, Executive Vice
President and General Counsel

Telephone:  949-475-3942

Facsimile:  949-706-6208

Email:  ron.morrison@impaccompanies.com

 

if
to Buyer:

 

East
West Bank

135 N. Los Robles Avenue, Suite 600

Pasadena, CA  91101

Attention:  Robert Lo, Senior Vice
President

Telephone:  626-768-6689

Facsimile:  626-817-8899

Email:  robert.lo@eastwestbank.com

 

21

 

with
a copy to:

 

East
West Bank

135 N. Los Robles Avenue, Suite 600

Pasadena, CA  91101

Attention:  Mary Kenney, Esq.,
Senior Vice President and Senior Deputy General Counsel

Telephone:  626-768-6883

Facsimile:  626-243-1275

Email:  mary.kenney@eastwestbank.com

 

Notwithstanding
the foregoing, a facsimile transmission shall be deemed received when
transmitted so long as the transmitting machine has provided an electronic
confirmation of successful transmission, and an e-mail shall be deemed received
when transmitted so long as a “read receipt” has been received by the sender to
confirm the recipient’s receipt.  All
financial statements delivered shall be hand-delivered or sent by overnight
delivery.  Either party may revise any
information relating to it by notice in writing to the other party, which
notice shall be effective on the third business day following receipt thereof.

 

14.                               Payment
of Expenses

 

Each
Seller hereby covenants, jointly and severally, to pay on demand all reasonable
costs and expenses (including, without limitation, the costs and expenses for
legal services of any kind whatsoever) incurred by Buyer in connection with
this Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby, whether or not any Transactions are entered
into hereunder, including, by way of illustration and not by way of limitation,
the out-of-pocket costs and expenses incurred in connection with (i) the
preparation, reproduction and distribution of this Agreement and the other
Transaction Documents and any opinions of counsel, certificates of officers or
other documents contemplated by the aforementioned agreements (provided,
however, that the aggregate legal fees of Buyer for the preparation, negotiation
and execution of this Agreement that Sellers are to reimburse shall not exceed
$25,000) and (ii) any amendment to or waiver of any provision of this
Agreement requested by any Seller. 
Notwithstanding the foregoing, the costs and expenses of entering into
Transactions hereunder are included in the fees set forth on the Term Sheet
and, provided no Event of Default has occurred and is continuing, Sellers shall
not be required to pay any other fees to Buyer in connection with Transactions.  The obligation of each Seller to pay such
fees and expenses incurred prior to or in connection with the termination of
this Agreement or any Transaction Document shall survive the termination of
this Agreement and such Transaction Documents.

 

15.                               Opinions
of Counsel

 

Each
Seller shall, upon the request of Buyer, cause to be delivered to Buyer, with
reliance thereon permitted as to any Person that purchases the Eligible Loans
from Buyer, a favorable opinion of counsel with respect to such matters as
Buyer may request in form and substance acceptable to Buyer.

 

22

 

16.                               Further
Assurances; Additional Information

 

(a)                          At any time and
from time to time, upon the request of Buyer and at the sole expense of
Sellers, Sellers shall promptly provide such further assurances or agreements
as Buyer may reasonably request in order to effect the purposes of this
Agreement, including without limitation the assignment, conveyance and transfer
of all right, title and interest of each Purchased Eligible Loan from the
relevant Seller to Buyer, or to otherwise obtain or preserve the benefits or
rights granted under this Agreement.

 

(b)                         At any
reasonable time, each Seller shall permit Buyer, its agents or attorneys, at
Buyer’s expense, to inspect and copy any and all documents and data in its
possession pertaining to each Purchased Eligible Loan that is the subject of
such Transaction.  Such inspection shall
occur upon the request of Buyer at a mutually agreeable location during regular
business hours and on a date not more than two (2) Business Days after the
date of such request.  Notwithstanding
the foregoing, if an Event of Default by any Seller shall have occurred and be
continuing, then Buyer, upon notice to Sellers, shall have an immediate right
to inspect and copy any and all documents and data in the possession of any
Seller pertaining to each Purchased Eligible Loan that is the subject of such
Transaction and to the extent that such Seller does not have possession of the
relevant loan information for such Purchased Eligible Loans, such Seller shall
cause the applicable Servicer to provide Buyer with access and review of such
loan information.

 

(c)                          Each Seller
agrees to provide Buyer or its agents, from time to time, with such information
concerning such Seller of a financial or operational nature as Buyer may
reasonably request.

 

(d)                         Each Seller
shall provide Buyer or its agents, with copies of (i) all filings made by
or on behalf of such Seller or any entity that controls such Seller, with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, promptly upon making such filings, or (ii) if such
Seller is not required to make filings with the Securities and Exchange
Commission, such financial and other reports as may be required by the Term
Sheet.

 

17.                               Buyer
as Attorney-in-Fact

 

Each
Seller hereby appoints Buyer as its attorney-in-fact for the purpose of
carrying out the provisions of this Agreement and the other Transaction
Documents and taking any action and executing any instruments that Buyer may
deem necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an
interest.  Without limiting the
generality of the foregoing, Buyer shall have the right and power upon the
occurrence and during the continuation of any Event of Default to receive,
endorse, collect and control all checks or instruments made payable to the
order of any Seller and all other forms of payment to any Seller that represent
any payment on account of the principal of or interest on or proceeds from any
of the Purchased Eligible Loans and to give full discharge for the same.

 

23

 

18.                               Wire
Instructions

 

Any
amounts to be transferred by one party to the other shall be transferred
according to the wire instructions contained in the Term Sheet.  Amounts received by Buyer after 1:00 p.m.,
Los Angeles time, on any Business Day shall be deemed to have been paid and
received on the next succeeding Business Day.

 

19.                               Entire
Agreement; Severability; Term Sheet

 

This
Agreement and the other Transaction Documents shall supersede any existing
agreements between the parties containing general terms and conditions for
repurchase transactions.  Each provision
and agreement herein shall be treated as separate and independent from any
other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement; provided, however, that each Seller and Buyer hereby
acknowledge and agree that the Servicing Rights are an integral part of this
Agreement and any and all provisions regarding such Servicing Rights shall not
be severable from the provisions regarding the Purchased Eligible Loans.  The execution and delivery of the Term Sheet
and any other documents designated therein by each Seller is a condition to the
effectiveness of this Agreement.

 

20.                               Non-assignability;
Termination

 

(a)                          Except with
respect to any repurchase transaction, sale, transfer, pledge or hypothecation
by Buyer pursuant to Paragraph 8 hereof, the rights and obligations of the
parties under this Agreement, under the other Transaction Documents and under
any Transaction shall not be assigned by either party without the prior written
consent of the other party and any such assignment without the prior written
consent of the other party shall be null and void.  Subject to the foregoing, this Agreement, the
other Transaction Documents and any Transactions shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns.

 

(b)                         Subparagraph (a) of
this Paragraph 20 shall not preclude a party from assigning, charging or
otherwise dealing with all or any part of its interest in any sum payable to it
under Paragraph 10 hereof.

 

(c)                          This Agreement,
the other Transaction Documents and all Transactions outstanding hereunder
shall terminate automatically without any requirement for notice on the
Termination Date.  However, no such
termination shall affect any Seller’s and Guarantor’s outstanding obligations
to Buyer at the time of such termination. 
All of each Seller’s payment obligations to Buyer, all of each Seller’s
obligations to indemnify Buyer and all of Buyer’s rights and remedies by reason
of any Event of Default by Buyer pursuant to this Agreement and any of the
other Transaction Documents shall survive such termination.

 

21.                               Counterparts

 

This
Agreement may be executed in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall constitute but
one and the same instrument.

 

24

 

22.                               Governing
Law; Submission to Jurisdiction; Waivers

 

(a)                          THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.

 

(b)                         EACH OF BUYER AND EACH SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

(i)                                     SUBMITS
FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE PERSONAL
JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA LOCATED IN LOS ANGELES
COUNTY, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE CENTRAL
DISTRICT OF CALIFORNIA, AND APPELLATE COURTS FROM ANY THEREOF;

 

(ii)                                  CONSENTS THAT ANY SUCH ACTION OR
PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY
LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR
CLAIM THE SAME;

 

(iii)                               AGREES THAT SERVICE OF PROCESS IN
ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL OR
DELIVERY), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN PARAGRAPH 13 HEREIN OR
AT SUCH OTHER ADDRESS OF WHICH THE BUYER SHALL HAVE BEEN NOTIFIED; AND

 

(iv)                              AGREES THAT NOTHING HEREIN SHALL
AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

 

(c)                          BUYER
AND EACH SELLER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

23.                               No
Waivers, Etc.

 

No
express or implied waiver of any Event of Default by Buyer shall constitute a
waiver of any other Event of Default and no exercise of any remedy hereunder by
any party shall constitute a waiver of its right to exercise any other remedy
hereunder.  No modification or 

 

25

 

waiver
of any provision of this Agreement or any other Transaction Document and no
consent by any party to a departure herefrom or therefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose given.  Without limitation on any of the foregoing,
the failure by Buyer to give a notice pursuant to any provision hereof will not
constitute a waiver of any right to do so at a later date.

 

24.                               Use of
Employee Plan Assets

 

(a)                          If assets of an
employee benefit plan subject to any provision of the Employee Retirement
Income Security Act of 1974 (“ERISA”) are intended to be used by either
party hereto (the “Plan Party”) in a Transaction, the Plan Party shall
so notify the other party prior to the Transaction.  The Plan Party shall represent in writing to
the other party that the Transaction does not constitute a prohibited
transaction under ERISA, and that the Eligible Loans that are the subject of
the Transaction are not, and will not as a result of the Transaction become, “plan
assets” as that term is used in ERISA. 
The other party may proceed in reliance on such writing, but shall not
be required to so proceed.

 

(b)                         Subject to the
last sentence of subparagraph (a) of this Paragraph 24, any such
Transaction shall proceed only if the relevant Seller furnishes or has
furnished to Buyer its most recent available audited statement of its financial
condition and its most recent subsequent unaudited statement of its financial
condition.

 

(c)                          By entering
into a Transaction pursuant to this Paragraph 24, each Seller shall be
deemed (i) to represent to Buyer that since the date of such Seller’s
latest such financial statements, there has been no material adverse change in
such Seller’s financial condition that such Seller has not disclosed to Buyer,
and (ii) to agree to provide Buyer with future audited and unaudited
statements of its financial condition as they are issued, so long as it is a
Seller in any outstanding Transaction involving a Plan Party.

 

25.                               Intent

 

(a)                          The parties
intend and acknowledge that each Transaction is a “repurchase agreement” and a “master
netting agreement” as each such term is defined in Section 101 of Title 11
of the United States Code, as amended (except insofar as the type of Eligible
Loans subject to such Transaction or the term of such Transaction would render
such definition inapplicable), and a “securities contract” as that term is
defined in Section 741 of Title 11 of the United States Code, as amended
(except insofar as the type of assets subject to such Transaction would render
such definition inapplicable).

 

(b)                         The parties
understand that either party’s right to liquidate Eligible Loans delivered to
it in connection with Transactions hereunder or to exercise any other remedies
pursuant to Paragraph 10 hereof, is a contractual right to liquidate,
terminate or accelerate such Transaction as described in Sections 555, 559 and
561 of Title 11 of the United States Code, as amended.

 

(c)                          The parties
agree and acknowledge that if a party hereto is an “insured depository
institution,” as such term is defined in the Federal Deposit Insurance Act, as
amended (“FDIA”), then each Transaction hereunder is a “qualified financial
contract,” as that term is defined in 

 

26

 

FDIA and any rules, orders or policy statements
thereunder (except insofar as the type of assets subject to such Transaction
would render such definition inapplicable).

 

(d)                         The parties
understand that this Agreement constitutes a “netting contract” as defined in
and subject to Title IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment
obligation under any Transaction hereunder shall constitute a “covered
contractual payment entitlement” or “covered contractual payment obligation”,
respectively, as defined in and subject to FDICIA (except insofar as one or
both of the parties is not a “financial institution” as that term is defined in
FDICIA).

 

26.                               Indemnity

 

Each
Seller agrees, jointly and severally, to hold Buyer and its affiliates and
their respective officers, directors, employees, agents and advisors (each an “Indemnified
Party”) harmless from and indemnify any Indemnified Party against all third
party liabilities, losses, damages, judgments, costs and expenses of any kind
that may be imposed on, incurred by or asserted against such Indemnified Party
(collectively, “Costs”), relating to or arising out of this Agreement,
any other Transaction Document or any transaction contemplated hereby or
thereby, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement, any other Transaction Document
or any transaction contemplated hereby or thereby, that, in each case, results
from anything other than the Indemnified Party’s gross negligence or willful
misconduct.  Without limiting the
generality of the foregoing, each Seller agrees to hold any Indemnified Party
harmless from and indemnify such Indemnified Party against all Costs with
respect to all Mortgage Loans relating to or arising out of any taxes incurred
or assessed in connection with the ownership of the Mortgage Loans, that, in
each case, results from anything other than the Indemnified Party’s gross
negligence or willful misconduct.  In any
suit, proceeding or action brought by an Indemnified Party in connection with
any Mortgage Loan for any sum owing thereunder, or to enforce any provisions of
any Mortgage Loan, each Seller will save, indemnify and hold such Indemnified
Party harmless from and against all expense, loss or damage suffered by reason
of any defense, set off, counterclaim, recoupment or reduction or liability
whatsoever of the account debtor or obligor thereunder, arising out of a breach
by any Seller of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
account debtor or obligor or its successors from any Seller.  Each Seller also agrees to reimburse an
Indemnified Party as and when billed by such Indemnified Party for all the
Indemnified Party’s costs and expenses incurred in connection with the
enforcement or the preservation of Buyer’s rights under this Agreement, any
other Transaction Document or any transaction contemplated hereby or thereby,
including without limitation the reasonable costs and expenses of its counsel.

 

27.                               Full
Recourse

 

The
obligations of each Seller from time to time to pay the Repurchase Price, the
Price Differential and all other amounts due under this Agreement or any other
Transaction Document shall be full recourse obligations of such Seller.

 

27

 

28.                               Tax
Treatment

 

Each
party to this Agreement acknowledges that it is its intent for purposes of U.S.
federal, state and local income and franchise taxes, to treat each Transaction
as indebtedness of each Seller that is secured by all of the Purchased Eligible
Loans and that the Purchased Eligible Loans purchased from each Seller are
owned by such Seller in the absence of a default by such Seller.  All parties to this Agreement agree to such
treatment and agree to take no action inconsistent with this treatment, unless
required by law.

 

29.                               Disclosure
Relating to Certain Federal Protections

 

The
parties acknowledge that they have been advised that in the case of
Transactions in which one of the parties is a financial institution, funds held
by the financial institution pursuant to a Transaction hereunder are not a
deposit and therefore are not insured by the Federal Deposit Insurance
Corporation or the National Credit Union Administration, as applicable.

 

30.                               Timing
of Payments and Actions

 

Each
party to this Agreement agrees that in the event any payment or action is due
on a day that is not a Business Day such payment or action shall be made or
taken on the next succeeding Business Day.

 

31.                               Joint
and Several Obligations

 

Each
Seller hereby acknowledges and agrees that it shall be jointly and severally
liable to Buyer for all representations, warranties, covenants, obligations and
indemnities of each Seller hereunder. 
Each Seller waives any and all notice of the creation, renewal,
extension or accrual of any of such obligations and notice of or proof of
reliance by Buyer upon the obligations of such Seller set forth herein or
acceptance of such obligations by such Seller hereunder.  Each Seller waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon each
other Seller with respect to such obligations. 
Each Seller’s obligations shall be construed as continuing, absolute and
unconditional obligations without regard to 
(i) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
any Seller against the Buyer, or (ii) any other circumstance whatsoever
(with or without notice to or knowledge of any Seller) that constitutes, or
might be construed to constitute, an equitable or legal discharge of such
Seller for any such obligations.  Each
Seller hereby waives any defense arising by reason of, and any and all right to
assert against the Buyer any claim or defense based upon, an election of
remedies by the Buyer that in any manner impairs, affects, reduces, releases,
destroys and/or extinguishes such Seller’s subrogation rights, rights to
proceed against such Seller or any other party for reimbursement or
contribution, and/or any other rights of such Seller to proceed against any
other Seller, against any other guarantor, or against any other person or
security.

 

32.                               Waivers
by Sellers

 

To
the extent that any party constituting a Seller (a “Seller Entity”) is a
surety or guarantor under applicable law, whether in respect of any other
Seller Entity’s obligations or otherwise, and whether under this Agreement, the
Pledge Agreement or any other Transaction 

 

28

 

Document,
then each such Seller Entity, solely in such Seller Entity’s capacity as a
surety or guarantor, waives any defenses such Seller Entity may have under the
laws or decisions of the State of California pertaining to the rights and
remedies of sureties.  Without limiting
the foregoing, and to the extent permitted by law, each Seller Entity, solely
in such Seller Entity’s capacity as a surety or guarantor, hereby waives and
agrees not to assert or take advantage of:

 

(a)                          Any right to
require Buyer to proceed against any Seller Entity or any other indemnitor,
obligor or guarantor of the indebtedness and obligations evidenced hereby or
any other person or entity or to proceed against or exhaust any security held
by Buyer at any time or to pursue any other remedy in Buyer’s power or under
any other agreement before proceeding against any Seller Entity hereunder;

 

(b)                         Any defense
that may arise by reason of the incapacity, lack of authority, death or
disability of any other person or entity or the failure of Buyer to file or
enforce a claim against the estate (in administration, bankruptcy or any other
proceeding) of any other person or entity;

 

(c)                          Demand,
presentment for payment, notice of nonpayment, intent to accelerate,
acceleration, protest, notice of protest and all other notices of any kind, or
the lack of any thereof, including, without limiting the generality of the
foregoing, notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the
part of any Seller Entity, Buyer, any endorser or creditor of any Seller Entity
or on the part of any other person or entity whomsoever under this or any other
instrument in connection with any obligation or evidence of indebtedness held
by Buyer;

 

(d)                         (i) Any
defense based upon an election of remedies by Buyer, even though such election
destroys or otherwise impairs the subrogation rights of any Seller Entity or
the right of any Seller Entity to proceed against any other Seller Entity for
reimbursement, or both, and (ii) any and all rights or defenses any Seller
Entity may have by reason of protection afforded to any other Seller Entity
with respect to any of the obligations of each Seller Entity under this
Agreement or other laws of the State of California limiting or discharging any
Seller Entity’s indebtedness evidenced by this Agreement and secured, in part,
by the Transaction Documents;

 

(e)                          Any right or
claim or right to cause a marshaling of the assets of any or all of the Seller
Entities;

 

(f)                            Any principle
or provision of law, statutory or otherwise, which is or might be in conflict
with the terms and provisions of this Agreement;

 

(g)                         Any duty on the
part of Buyer to disclose to any Seller Entity any facts Buyer may now or
hereafter know about any other Seller Entity, Buyer’s security under this
Agreement or any other Transaction Document, regardless of whether Buyer has
reason to believe that any such facts materially increase the risk beyond that
which such Seller Entity intends to assume or Buyer has reason to believe that
such facts are unknown to such Seller Entity or have a reasonable opportunity
to communicate such facts to such Seller Entity, it being understood and agreed
that each Seller Entity is fully responsible for being and keeping informed of
the financial condition of any other Seller Entity, of any and all
circumstances bearing on the risk that liability may be incurred by such Seller
Entity hereunder;

 

29

 

(h)                         Any lack of
notice of disposition or of manner of disposition of any collateral;

 

(i)                             Any
deficiencies in the collateral or any deficiency in the ability of Buyer to
collect or to obtain performance from any persons or entities now or hereafter
liable for the payment and performance of any obligation of this Agreement or
any other Transaction Document;

 

(j)                             Any assertion
or claim that the automatic stay provided by 11 U.S.C. §362 (arising upon the
voluntary or involuntary bankruptcy proceeding of any Seller Entity) or any
other stay provided under any other debtor relief law (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable, shall operate or be
interpreted to stay, interdict, condition, reduce or inhibit the ability of
Buyer to enforce any of Buyer’s rights, whether now or hereafter required,
which Buyer may have under this Agreement or any other Transaction Document;

 

(k)                          Any
modifications of the Transaction Documents or any obligation of any Seller
Entity by operation of law or by action of any court, whether pursuant to the
Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law
(whether statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, or otherwise;

 

(l)                             Any action,
occurrence, event or matter consented to by any Seller Entity under Section 32(h) hereof,
under any other provision hereof, or otherwise;

 

(m)                       Any and all
benefits and defenses under California Civil Code Section 2810;

 

(n)                         Any and all
benefits and defenses under California Civil Code Section 2809;

 

(o)                         All principles
or provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of this Agreement.  By
doing so, each Seller Entity agrees that such Seller Entity’s obligations shall
not be affected by any circumstances, whether or nor referred to in this
Agreement, which might otherwise constitute a legal or equitable discharge of a
surety or a guarantor; and

 

(p)                         Any right of
discharge under any and all statutes or other laws relating to guarantors or
sureties and any other rights of sureties and guarantors thereunder.

 

Each
Seller Entity understands that the exercise by Buyer of certain rights and
remedies contained in the Transaction Documents may affect or eliminate such
Seller Entity’s right of subrogation against any other Seller Entity and that
such Seller Entity may therefore incur a partially or totally nonreimbursable
liability under this Agreement. 
Nevertheless, such Seller Entity hereby authorizes and empowers Buyer to
exercise, in its sole and absolute discretion, any right or remedy, or any
combination thereof, which may then be available.

 

In
accordance with Section 2856 of the California Civil Code, such Seller
Entity also waives any right or defense based upon an election of remedies by
Buyer, even though such election destroys or otherwise impairs the subrogation
rights of such Seller Entity or the rights of such Seller Entity (after payment
of the obligations guaranteed by such Seller Entity under this Agreement) to
proceed against any other Seller Entity for reimbursement, or both.

 

30

 

In
accordance with Section 2856 of the California Civil Code, each Seller
Entity waives any and all other rights and defenses available to Seller Entity
by reason of Sections 2787 through 2856, inclusive, of the California
Civil Code, including any and all rights or defenses such Seller Entity may
have by reason of protection afforded to such Seller Entity with respect to any
of the obligations of such Seller Entity under this Agreement pursuant to the
antideficiency or other laws of the State of California limiting or discharging
a Seller Entity’s indebtedness. 
Likewise, each Seller Entity waives any and all rights and defenses
available to Seller Entity under California Civil Code Sections 2899 and
3433.

 

Each
Seller Entity shall have no right of, and hereby waives any claim for,
subrogation, reimbursement, indemnification, and contribution against any other
Seller Entity and against any general partner, member or other constituent of
any other Seller Entity, and against any other person or any collateral or
security for the indebtedness (including without limitation any such rights
pursuant to Sections 2847 and 2848 of the California Civil Code), until
the indebtedness has been indefeasibly paid and satisfied in full and all
outstanding obligations owed to Buyer under the Transaction Documents have been
fully performed.

 

[Signatures on next page]

 

31

 

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

 

	
  BUYER:

  	
   

  
	
   

  	
   

  
	
  EAST WEST BANK

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Robert Lo

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Robert
  Lo

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  6/25/10

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SELLERS:

  	
   

  
	
   

  	
   

  
	
  EXCEL MORTGAGE SERVICING, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  William Ashmore

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  William
  Ashmore/President

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  6-24-10

  	
   

  
	
   

  	
   

  	
   

  
	
  SYNERGY CAPITAL MORTGAGE CORP.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  William Ashmore

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  6-24-10

  	
   

  

 

32

 

ANNEX I

 

TERM SHEET

 

Date:  June 24, 2010

 

This
term sheet (“Term Sheet”) is made and entered into as of the date set forth
above by and between East West Bank (“Buyer”), and Synergy Capital Mortgage
Corp. and Excel Mortgage Servicing, Inc. (each a “Seller” and,
collectively, the “Sellers”) with respect to that certain Master Repurchase
Agreement dated as of June 24, 2010 (the “Agreement”).  Capitalized terms used but not defined herein
shall have the meanings set forth in the Agreement.  This Term Sheet supplements and forms a part
of the Agreement and the execution and delivery hereof is a condition to the
effectiveness of the Agreement.  In the
event of any conflict between the terms hereof and the terms of the Agreement,
this Term Sheet shall prevail.

 

	
  Buyer:  East West
  Bank

  	
  Sellers: 

  	
  Synergy
  Capital Corp.

  
	
   

  	
   

  	
  Excel
  Mortgage Servicing, Inc.

  
	
  Address:

  	
  135
  N. Los Robles Avenue

  	
   

  	
   

  
	
   

  	
  Suite 600

  	
  Address:

  	
  19500
  Jamboree Road

  
	
   

  	
  Pasadena,
  California 91101

  	
   

  	
  Irvine,
  California 92612

  
	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
  Robert
  Lo

  	
  Attention:

  	
  Kathy
  Hancock

  
	
   

  	
  Senior
  Vice President

  	
   

  	
  Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
  Telephone:  626-768-6689

  	
  Telephone:  949-475-3822

  
	
   

  	
   

  
	
  Facsimile:  626-817-8899

  	
  Facsimile:  949-475-3969

  
	
   

  	
   

  
	
  Email:  robert.lo@eastwestbank.com

  	
  Email:  kathy.hancock@impaccompanies.com

  
					

 

	
  Maximum
  Aggregate Purchase Price:

  	
   

  	
  $10,000,000

  
	
   

  
	
  Sublimits:

  	
  Transactions
  for which the dry funding documents have not been received in accordance with
  Section 3(d) of the Agreement shall not at any time exceed 40% of
  the Maximum Aggregate Purchase Price

  
	
   

  	
   

  
	
  Initial
  Pricing Rate:

  	
  LIBOR
  + 4.00%, but not less than 5.00%

  
	
   

  	
   

  
	
  Repurchase
  Date:

  	
  60
  calendar days after Purchase Date (or the next Business Day if such day is
  not a Business Day), subject to curtailment as set forth below for Aged Loans

  
	
   

  	
   

  
	
  Transaction
  Fees:

  	
  $75.00
  for each Purchased Eligible Loan

  
	
   

  	
   

  
	
  Wire
  Transfer Fee:

  	
  $12.50

  
				

 

1

 

	
  Guarantor:

  	
  Integrated
  Real Estate Service Corp.

  

 

Aged
Loans:

 

·                                          Purchased Eligible Loans are
considered stale/aged at thirty-one (31) calendar days after the Purchase Date,
at which point:

 

1.                                       Each Seller
shall, no later than five (5) Business Days after request from Buyer, pay
Buyer ten percent (10%) of the Purchase Price paid by Buyer to such Seller to
purchase such Purchased Eligible Loan; and

 

2.                                       To the extent
such Seller has not Repurchased a Purchased Eligible Loan on or before the date
which is forty-one (41) days after the Purchase Date, such Seller shall, no
later than five (5) Business Days after request from Buyer, pay Buyer an
additional ten percent (10%) of the Purchase Price paid by Buyer to such Seller
to purchase such Purchased Eligible Loan, which ten percent (10%) of the
Purchase Price shall be in addition to the ten percent (10%) of the Purchase
Price described in clause 1 immediately above (for an aggregate of twenty percent
(20%) of the Purchase Price); and

 

3.                                       To the extent a
Seller has not repurchased a Purchased Eligible Loan on or before the date
which is sixty (60) days after the Purchase Date, such Seller shall on the
succeeding Business Day following the expiration of such sixty (60) day period
repurchase the Purchased Eligible Loan from Buyer.

 

·                                          Buyer shall apply any such
payments from a Seller to reduce the Purchase Price paid for the applicable
Purchased Eligible Loan.

 

·                                          Notwithstanding
anything contained in the Agreement or this Term Sheet to the contrary, each
Seller hereby acknowledges and agrees that such Seller shall in no event have
the right to use funds constituting that certain certificate of deposit held as
account number CD #178038725 in the amount of $1,000,000 at East West Bank,
which is the subject of the Pledge Agreement (the “Cash Collateral Account”),
to pay any such payment to Buyer.  At
such time as Seller has outstanding Transactions with a Purchase Price
aggregating more than $5,000,000, Seller covenants and agrees to deposit an
additional $1,000,000 to the Cash Collateral Account.  The Cash Collateral Account shall thereafter
be maintained at not less than $2,000,000, regardless of whether the
outstanding Transactions at any time thereafter are less than $5,000,000.  The Cash Collateral Account shall be a
blocked account.  Sellers shall not have
any right to withdraw or direct payment of funds from the Cash Collateral Account
(including the additional $1,000,000) while any Transaction is unpaid or
outstanding or any commitment or obligation under this Agreement by the Buyer
to purchase Eligible Loans is available or outstanding.

 

Sellers’
Wire Instructions:

 

	
  Beneficiary
  Name: (Required)

  	
   

  	
  [See
  Below]

  
	
  Beneficiary
  Account Number: (Required)

  	
   

  	
  [See
  Below]

  

 

2

 

	
  Bank
  Routing Number: (Domestic Wires)

  	
   

  	
  322070381

  
	
  Bank
  Routing/Swift Code: (Intl Wires)

  	
   

  	
  EWBKUS66XXX

  
	
  Receiving
  Bank Name:

  	
   

  	
  East
  West Bank

  
	
  Receiving
  Bank Address: (Branch Address)

  	
   

  	
  135
  N. Los Robles Ave., Suite 600

  
	
  Receiving
  Bank Address (Branch City, State, Zip)

  	
   

  	
  Pasadena,
  CA 91101

  

 

Funds
due to a Seller shall be deposited in the appropriate account at East West
Bank:

 

Account
Name:  Excel Mortgage Servicing, Inc.]

Account
No.:  8003001271 (the “Excel Operating
Account”)

 

Account
Name:  Synergy Capital Mortgage Corp.

Account
No.:  8003001255 (the “Synergy
Operating Account”)

 

The
Excel Operating Account and the Synergy Operating Account are sometimes
referred to individually as an “Operating Account” and, collectively, as
the “Operating Accounts”.

 

Buyer’s
Wire Instructions:

 

Any
amounts to be transferred by a Seller to Buyer hereunder, as well as all
payments by Approved Takeout Investors, shall be sent by wire transfer in
immediately available funds to the appropriate account of Buyer at East West
Bank:

 

Account
Name:  East West Bank in Trust for Excel
Mortgage Servicing, Inc.

Account
No.:  8003001313 (the “Excel
Settlement Account”)

 

Account
Name:  East West Bank in Trust for
Synergy Capital Mortgage Corp.

Account
No.:  8003001248 (the “Synergy
Settlement Account”)

 

The
Excel Settlement Account and the Synergy Settlement Account are sometimes
referred to individually as a “Settlement Account” and, collectively, as
the “Settlement Accounts”.

 

The
Settlement Accounts shall be blocked accounts.

 

Funds
received in a Settlement Account by Buyer from an Approved Takeout Investor
shall be applied to the Repurchase Price and any fees and charges due to East
West Bank for the Purchased Eligible Loans to which the funds apply.  Buyer shall transfer all amounts received
from the Approved Takeout Investor in excess of the Repurchase Price for the
Purchased Eligible Loans to which the funds apply to the appropriate Operating
Account.  If the funds are received by
12:00 noon on a Business Day, the transfer to the Operating Account shall occur
on the same Business Day.  If the funds
are received after 12:00 noon, the transfer shall occur on the following
Business Day.

 

Financial
Covenants:

 

1.                                       At all times
during the term of the Agreement, the aggregate Tangible Net Worth of Sellers
and Guarantor shall equal to or greater than Seventeen Million Dollars
($17,000,000).

 

3

 

2.                                       At all times
during the term of the Agreement, the aggregate amount of cash or cash
equivalents (inclusive of the funds on deposit in the Cash Collateral Account
and the Operating Accounts) maintained or held on deposit by Sellers and
Guarantor shall be equal to or greater than Five Million Dollars ($5,000,000).

 

Other
Covenants:

 

1.                                       Each Seller
shall immediately notify Buyer prior to entering into a new warehouse
relationship or an increase in existing facilities with other parties.

 

2.                                       Each Seller
shall, with respect to any Seller, Guarantor and any of their respective
affiliates, immediately notify Buyer of any Material Adverse Effect.

 

3.                                       Each Seller
shall immediately notify Buyer if such Seller becomes aware of any
circumstances constituting an occurrence of fraud in the origination of any
Purchased Eligible Loan.

 

4.                                       Each Seller
shall maintain fidelity bond and errors and omissions insurance policies, each
with a minimum coverage of $1,000,000. 
Such policies shall include right of action loss payee and warehouse
lender endorsements in favor of Buyer.

 

5.                                       Each Seller
shall, not later than two (2) Business after the occurrence thereof,
notify Buyer of any event of default under that certain Credit Agreement, dated
as of October 30, 2009, by and among UBS Real Estate Securities, Inc.,
as lender, and certain affiliates of the Sellers, as borrowers, or under any
other document evidencing, securing or otherwise entered into in connection
with any other material liabilities of Sellers or Guarantor.

 

6.                                       At all times
during the term of the Agreement, each Seller and their respective affiliates
shall maintain accounts at East West Bank (which accounts shall at all times
during the term of the Agreement have a minimum balance of not less than Twenty
Million Dollars ($20,000,000), inclusive of the funds on deposit in the Cash
Collateral Account and the Operating Accounts).

 

7.                                       Each Seller
shall (a) not later than forty five (45) days after the end of each
calendar quarter (except the last calendar quarter of the fiscal year), deliver
to Buyer Sellers’ financial statements certified by an officer of each Seller,
and (b) not later than ninety (90) days after the end of each calendar
year, deliver to Buyer Sellers’ audited (by auditors acceptable to Buyer in
Buyer’s sole but reasonable discretion) consolidated financial statements.

 

8.                                       Guarantor shall
(a) not later than forty five (45) days after the end of each calendar
quarter (except the last calendar quarter of the fiscal year), deliver to Buyer
Guarantor’s financial statements certified by an officer of Guarantor, and (b) not
later than ten (10) days after filing, deliver to Buyer Guarantor’s tax
returns for the previous calendar year.

 

4

 

EXHIBIT A-1

 

TRANSACTION REQUEST

 

The
parties to this Transaction Request are the following:

 

	
  Seller:

  	
  [Synergy
  or Excel]

  
	
   

  	
   

  
	
  Buyer:

  	
  East
  West Bank

  

 

Mortgage
Loans:

 

THE
MORTGAGE LOAN(S) COVERED BY THIS TRANSACTION REQUEST IS(ARE)  LISTED AND DESCRIBED IN THE ATTACHED SCHEDULE
OF MORTGAGE LOAN(S).

 

Purchase
Price:

 

Sale:                                                                                                                       For value received,
Seller hereby conveys to the Buyer all rights, title and interest in and to the
following:

 

(a)                                  The Note and
the related Mortgage for each Mortgage Loan;

 

(b)                                 all rights to
payment thereunder;

 

(c)                                  all rights
related thereto, such as financing statements, guaranties and insurance
policies (issued by governmental agencies or otherwise), including
(i) mortgage and title insurance policies, (ii) fire and extended
coverage insurance policies (including the right, if any, to any return premiums),
and (iii) if applicable, FHA insurance, VA guaranties, or private mortgage
insurance and all rights, if any, in escrow deposits consisting of impounds,
insurance premiums, or other funds held in account thereof;

 

(d)                                 all right,
title and interest of the owner of such loan in the real property, including
all improvements thereon, and the personal property (tangible and intangible)
that are encumbered by such Mortgage Loan (or deed of trust) and/or security
agreements;

 

(e)                                  all Servicing
Rights and other rights to service, administer and/or collect such Mortgage
Loan and all rights to the payment of money on account of such servicing,
administration and/or collection appraisals, computer programs, tapes, discs,
cards, accounting records, and other books, records, information, and data
relating to such loan necessary to the administration or servicing of such
Mortgage Loan (subject to Seller’s right to service set forth in the Master
Repurchase Agreement described herein); and

 

1

 

(f)                                    all accounts,
contract rights (including rights under any applicable Purchase Commitment),
and general intangibles constituting or relating to such loan.

 

Seller
hereby reaffirms the representations, warranties and covenants made in that
certain Master Repurchase Agreement between Seller and Buyer with respect to
Seller on and as of the date of such Agreement and with respect to the sold
Mortgage Loans on the Purchase Date.

 

Definitions:                                                                                  Terms used but
not defined herein shall have the meanings assigned to them in the above
referenced Master Repurchase Agreement.

 

 

	
  SELLER

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/
  William Ashmore

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  William
  Ashmore

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  Request
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  EAST WEST BANK

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/
  Robert Lo

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Robert
  Lo

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  SVP

  	
   

  
	
   

  	
   

  	
   

  
	
  Approval
  / Purchase Date:

  	
   

  	
   

  
					

 

2

 

EXHIBIT A-2

 

I.                                         Documents
Required to Purchase Dry Funded Mortgage Loans

 

·                                          Application from the
Mortgagor (1003)

·                                          Loan Approval and Purchase
Commitment from an Approved Takeout Investor

·                                          Credit Report for Mortgagor

·                                          Pages 1, 2, 3 &
4 of Appraisal

·                                          Original Note

·                                          Original Assignment of Deed
of Trust or Mortgage (if not registered with MERS)

·                                          Certified Copy of Deed of
Trust or Mortgage

·                                          Approved Takeout Investor
Shipping Instructions

·                                          Copy of MERS registration
naming East West Bank as the interim funder

·                                          Completed Wire Request
Form/Wiring Instructions

·                                          Transaction Request Form (Exhibit A-1)

·                                          Funding Request Form

·                                          FHA or VA Direct Endorsement

·                                          Mortgage Credit Analysis
Worksheet or Income Analysis as appropriate for FHA or VA

·                                          Copy of Title Commitment

·                                          Closing Protection Letter
from Closing Agent

·                                          Copy of hazard insurance
policy or binder of coverage

·                                          Flood certification

·                                          Uniform Underwriting and
Transmittal Summary (conventional only)

·                                          Copy of Mortgage Insurance
Certificate (conventional over 80% LTV — only when indicated on investor
approval as an outstanding condition)

·                                          Approved Takeout Investor
Shipping Instructions

 

II.                                     Documents
Required to Purchase Wet Funded Mortgage Loans

 

·                                          Application from the
Mortgagor (1003)

·                                          Loan Approval and Purchase
Commitment from an Approved Takeout Investor

·                                          Credit Report for Mortgagor

·                                          Pages 1, 2,3 &
4 of Appraisal

·                                          Copy of Note

·                                          Completed Wire Request
Form/Wiring Instructions

·                                          Transaction Request Form (Exhibit A-1)

·                                          Funding Request Form

·                                          Copy of Title Commitment

·                                          Closing Protection Letter
from Closing Agent

·                                          Copy of hazard insurance
policy or binder of coverage

·                                          Flood certification

·                                          Uniform Underwriting and
Transmittal Summary (conventional only)

 

1

 

·                                          Mortgage Credit Analysis
Worksheet (FHA only)

·                                          VA Loan Analysis (VA only)

·                                          Copy of Mortgage Insurance
Certificate (conventional over 80% LTV — only when indicated on investor
approval as an outstanding condition)

·                                          Approved Takeout Investor
Shipping Instructions

 

2

 

EXHIBIT B

 

REPRESENTATIONS AND WARRANTIES

RELATING TO THE PURCHASED ELIGIBLE LOANS

 

Transaction
Request.  The information with respect
to each Purchased Eligible Loan set forth in the related Transaction Request is
true and correct as of the date specified in all material respects;

 

Documents
to Custodian; No Table Funding.  All documentation required to be delivered to
the Custodian under the Custodial Agreement has been so delivered; and the
purchase by Buyer of each Purchased Eligible Loan constitutes a secondary
market transaction under the Real Estate Settlement Procedures Act (“RESPA”).  With respect to a Wet Funded Mortgage Loan,
all documentation required for a Dry Funded Mortgage Loan shall have been
delivered to the Buyer within four (4) Business Days after the
Transaction closes;

 

Purchase
Commitment from an Approved Takeout Investor.  Each Purchased Eligible Loan is subject to a
written and binding commitment to the relevant Seller from an Approved Takeout
Investor requiring the Approved Takeout Investor to purchase such loan from
such Seller at a price at least equal to the Purchase Price;

 

Type
of Mortgage Loan.  Each
Purchased Eligible Loan is a single family mortgage loan that consists of a
Note secured by a Mortgage, and each related property securing the related
Mortgage is improved by a single (one-to-four) family residential dwelling; and
each Purchased Eligible Loan satisfies the respective requirements of the
relevant Seller’s mortgage lending programs and Approved Take-Out Investor’s
mortgage lending programs;

 

Minimum
FICO.  Each Purchased Eligible Loan
has a minimum FICO of at least 680, except with respect to those Purchased
Eligible Loans that are either FHA insured or VA guaranteed;

 

CLTV
and LTV.  Each Purchased Eligible Loan
has a maximum combined loan-to-value ratio at origination in accordance with
the standards of the Approved Take-Out Investor for such Purchased Eligible
Loan, but not to exceed one hundred percent (100%);

 

Servicing.  Subservicer is servicing each Purchased
Eligible Loan in accordance with the terms of this Agreement; the servicing and
collection practices used by the Subservicer with respect to each Purchased
Eligible Loan have been in all respects legal, proper, prudent and customary
within the industry for the servicing of similar single family mortgage loans
and the servicing and collection practices used by any prior subservicers with
respect to each Purchased Eligible Loan have been in all respects legal;

 

Interest
Rate.  The Note related to each
Purchased Eligible Loan bears a fixed or adjustable interest rate; and if the
Purchased Eligible Loan provides for an adjustable interest rate, then the
terms of the related Note pertaining to interest rate adjustments, payment
adjustments and adjustments of the outstanding principal balance are
enforceable and such adjustments will not affect the priority of the lien of
the related Mortgage;

 

1

 

Valid
Lien.  Each Eligible Loan is a valid
and subsisting first lien of record (or is in the process of being recorded) on
the mortgaged property subject to the exceptions to title set forth in the
title insurance policy, with respect to the related Eligible Loan, which
exceptions are generally acceptable to banking institutions in connection with
their regular mortgage lending activities, and such other exceptions to which
similar properties are commonly subject and which do not individually, or in
the aggregate, materially and adversely affect the benefits of the security
intended to be provided by such Mortgage;

 

Title
and Ownership of Loans. 
Immediately prior to the transfer and assignment of the Eligible Loans
by the relevant Seller to Buyer as contemplated by this Agreement, such Seller
held good and indefeasible title to, and was the sole owner of, each Eligible
Loan (including the related Note) conveyed by the relevant Seller subject to no
liens, charges, mortgages, encumbrances or rights of others except as set forth
in clause (ix) or other liens which will be released simultaneously
with such transfer and assignment; and immediately upon the transfer of the
Purchased Eligible Loans as contemplated in this Agreement, Buyer will be the
sole owner of each Purchased Eligible Loan subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in Paragraph (ix) or
other liens which will be released simultaneously with such transfer;

 

No
Delinquency.  No
Purchased Eligible Loan is thirty (30) days or more delinquent;

 

No
Tax Lien or Damage.  There is no
delinquent tax or assessment lien on the property securing the related
Mortgage, and each mortgaged property is free of substantial damage or waste;

 

No
Rescission, Set-off or Invalidity.  The Mortgage and the Note are not subject to
any right of rescission, set-off, counterclaim or defense, including the
defense of usury, nor will the operation of any of the terms of the Mortgage or
the Note, or the exercise of any rights thereunder, render the Mortgage or the
Note invalid or unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;

 

No
Mechanics’ Lien.  There is no
mechanics’ lien or claim for work, labor or material affecting the property
securing the related Mortgage which is or may be a lien prior to, or equal
with, the lien of the related Mortgage except those which are insured against
by any title insurance policy referred to in Paragraph (xvi) below;

 

Compliance
with Laws.  Each
Purchased Eligible Loan at the time it was made complied in all material
respects with applicable state and federal laws and regulations, including,
without limitation, the federal Truth-in-Lending Act and other consumer
protection laws, usury, equal credit opportunity, disclosure and recording
laws;

 

Title
Insurance Policy.  With
respect to each Purchased Eligible Loan a lender’s title insurance policy,
issued in standard American Land Title Association form by a title insurance
company authorized to transact business in the state in which the property
securing the related Mortgage is situated, in an amount at least equal to the
original balance of such Purchased

 

2

 

Eligible
Loan insuring the mortgagee’s interest under the related Eligible Loan as the
holder of a valid first mortgage lien of record on the real property described
in the related Mortgage, as the case may be, subject only to exceptions of the
character referred to in Paragraph (ix) above, was effective on the date
of the origination of such Eligible Loan, and such policy is valid and
thereafter such policy shall continue in full force and effect;

 

Hazard
Insurance.  The
improvements upon the property securing the related Mortgage are covered by a
valid and existing hazard insurance policy with a carrier generally acceptable
to the relevant Seller that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the Mortgage Loan, (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the full
insurable value of the property securing the related Mortgage, and in any event
which is not less than the amount necessary to avoid the operation of any
co-insurance provisions with respect to such property in the event of any loss
less than the amount of the insurance coverage;

 

Flood
Insurance.  If the
property securing the related Mortgage is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration is in effect with
respect to such mortgaged property with a carrier generally acceptable to the
relevant Seller in an amount representing coverage not less than the least of
(A) the outstanding principal balance of the Mortgage Loan, (B) the
minimum amount required to compensate for damage or loss on a replacement cost
basis or (C) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973;

 

Enforceability
of Mortgage Loan.  Each
Mortgage and Note is the legal, valid and binding obligation of the maker
thereof and is enforceable in accordance with its terms, except only as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors’ rights generally
and by general principles of equity (whether considered in a proceeding or
action in equity or at law), and all parties to each Purchased Eligible Loan
had full legal capacity to execute all documents relating to such Eligible Loan
and convey the estate therein purported to be conveyed;

 

Insurance
Rights and Remedies.  The
relevant Seller has caused and will cause to be performed any and all acts
required to be performed to preserve the rights and remedies of Buyer in any
insurance policies applicable to any Purchased Eligible Loans transferred by
such Seller including, without limitation, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of Buyer;

 

Recordation
of Mortgage.  Each
original Mortgage was recorded or is in the process of being recorded, and if
the Mortgage Loan was originated in the name of someone other than the relevant
Seller, one or more assignments of Mortgage have been delivered for recordation
or have been recorded in the appropriate jurisdictions wherein such recordation
is necessary to reflect the transfer thereof from the original named mortgagee
to the relevant Seller, and to perfect the lien thereof as against creditors of
or purchasers from the relevant Seller or, if the relevant Seller is registered
with MERS, such MERS Mortgage has recorded in the name of 

 

3

 

MERS, or is in the process of being so recorded , and the ownership of
such MERS Mortgage by Buyer has been listed with MERS;

 

No
Impairment or Modification.  The terms of each Note and each Mortgage have
not been impaired, altered or modified in any respect other than as approved by
Buyer, except by a written instrument which has been recorded, if necessary, to
protect the interest of Buyer and which has been delivered to the
Custodian.  The substance of any such
alteration or modification is reflected on the related Transaction Request;

 

No
Future Advances; All Improvements Completed.  The proceeds of each Purchased Eligible Loan
have been fully disbursed, and there is no obligation on the part of the
mortgagee to make future advances thereunder; any and all requirements as to
completion of any on-site or off-site improvements and as to disbursements of
any escrow funds therefor have been complied with; all costs, fees and expenses
incurred in making or closing or recording such Eligible Loans were paid;

 

No
Other Security.  The related
Note is not and has not been secured by any collateral, pledged account or
other security except the lien of the corresponding Mortgage;

 

No
Shared Appreciation or Contingent Interest.  No Purchased Eligible Loan has a shared
appreciation feature, or other contingent interest feature;

 

State
Location and Residential Dwelling.  Each property securing the related Mortgage
is located in the state identified in the respective Transaction Request and
consists of one or more parcels of real property with a residential dwelling
erected thereon;

 

Due
on Sale Clause.  Each
Mortgage contains a provision for the acceleration of the payment of the unpaid
principal balance of the related Purchased Eligible Loan in the event the
property securing the related Mortgage is sold without the prior consent of the
mortgagee thereunder;

 

Consolidated
Principal Amount. Any advances made after the date of origination of
a Purchased Eligible Loan have been consolidated with the outstanding principal
amount secured by the related Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term reflected
on the respective Transaction Request; the consolidated principal amount does
not exceed the original principal amount of the related Purchased Eligible
Loan;

 

No
Condemnation.  There is no
proceeding pending, currently occurring or threatened for the total or partial
condemnation of the property securing the related Mortgage;

 

Improvements
within Boundaries; No Encroachment.  All of the improvements that were included
for the purposes of determining the appraised value of the property securing
the related Mortgage lie wholly within the boundaries and building restriction
lines of such property, and no improvements on adjoining properties encroach
upon such property, and are stated in the title insurance policy and
affirmatively insured;

 

4

 

Zoning
and Occupancy Compliance.  No
improvement located on or being part of the property securing the related
Mortgage is in violation of any applicable zoning law or regulation; all
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of each such property and, with respect to the
use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities and such property is lawfully occupied under the
applicable law;

 

Deed of Trust Trustee.  With respect to each Mortgage constituting a
deed of trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the owner of the Eligible
Loan to the trustee under the deed of trust, except in connection with a
trustee’s sale after default by the related Mortgagor;

 

Realization Against Property; No Homestead.  Each Mortgage contains customary and
enforceable provisions which render the rights and remedies of the holder
thereof adequate for the realization against the property securing the related
Mortgage of the benefits of the security, including (A) in the case of a
Mortgage designated as a deed of trust, by trustee’s sale and
(B) otherwise by judicial foreclosure. 
There is no homestead or other exemption other than any applicable
Mortgagor redemption rights available to the related Mortgagor which would
materially interfere with the right to sell the property securing the related
Mortgage at a trustee’s sale or the right to foreclose the related Mortgage;

 

No Mortgage Default or Acceleration.  There is no default, breach, violation or
event of acceleration existing under any Mortgage or the related Note and no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event of
acceleration; and the relevant Seller has not waived any default, breach,
violation or event of acceleration;

 

No Release or Waiver.  No instrument of release or waiver has been
executed in connection with any Purchased Eligible Loan, and neither the
related Mortgage nor the Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement which has been approved by
the primary mortgage guaranty insurer, if any, and which has been delivered to
the Custodian;

 

Appraisal.  Each
Purchased Eligible Loan was originated based upon an appraisal which complies
with the requirements set forth in the FDIC Improvement Act of 1991.

 

No Hazardous Substances.  There do not exist any hazardous substances,
hazard wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource
Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation on any mortgaged property that would give rise to a
cause of action under such legislation;

 

Seller Licensed.  The
relevant Seller was properly licensed or otherwise authorized, to the extent
required by applicable law, to purchase and sell each Purchased Eligible Loan;
and the consummation of the transactions herein contemplated, including,
without limitation, the

 

5

 

ownership
of the Purchased Eligible Loans by the relevant Seller, will not violate such
laws; and each other party that has had any interest in the Purchased Eligible
Loan, whether as a lender, broker, servicer, mortgagee, assignee, pledgee or
otherwise, is (or, during the period in which such party had such interest,
was) (A) in compliance with all applicable licensing requirements of the
laws of the state where the property securing the related Mortgagee is located,
and (B) (1) organized under the laws of such state, or
(2) qualified to do business in such state, or (3) a federal savings
and loan association or national bank, or a Federal Home Loan Bank or a savings
bank having principal offices in such state, or (4) not doing business in
such state;

 

Ground Lease.  With
respect to any property securing the related Mortgage which is subject to a
ground lease (i) the current ground lessor has been identified and all
ground rents which have previously become due and owing have been paid; (ii) the
ground lease term extends, or is automatically renewable, beyond the maturity
date of the related Purchased Eligible Loan; (iii) the ground lease has
been duly executed and recorded; (iv) the amount of the ground rent and
any increases therein are clearly identified in the lease and are for
predetermined amounts at predetermined times; (v) the ground rent payment
is included in the mortgagor’s monthly payment as an expense item in determining
the qualification of the mortgagor for such Eligible Loan; (vi) Buyer has
the right to cure defaults on the ground lease; and (vii) the terms and
conditions of the leasehold do not prevent the free and absolute marketability
of the mortgaged property;

 

No
Buydown Loans.  No
Purchased Eligible Loan is subject to a temporary rate reduction pursuant to a
buydown program;

 

Interest
Accrual.  Each Purchased Eligible Loan
accrues interest based upon a year of 360 days with twelve 30-day months; and

 

No
High Cost or Predatory Loans.  None of the Eligible Loans are
(a) Eligible Loans subject to 12 CFR Part 226.31, 12 CFR Part 226.32
or 226.34 of Regulation Z, the regulation implementing TILA, which implements
the Home Ownership and Equity Protection Act of 1994, as amended, or
(b) classified and/or defined, as a “high cost”, “threshold”, “predatory”
or “covered” loan (or a similarly classified loan using different terminology
under a law imposing additional legal liability for mortgage loans having high
interest rates, points and/or fees) under any other applicable state, federal
or local law, regulation or ordinance.

 

6

 

EXHIBIT C

 

PLEDGE AGREEMENT

 

This
PLEDGE AGREEMENT (this “Pledge”) is executed as of June 24, 2010, by and
between SYNERGY CAPITAL MORTGAGE CORP. and EXCEL MORTGAGE SERVICING, INC. (each a “Seller” and,
collectively, the “Sellers”), and EAST WEST BANK
(“Bank”).

 

RECITALS

 

A.                                   Bank has agreed
with Sellers pursuant to that certain Master Repurchase Agreement (the “Agreement”)
dated  June 24, 2010, to purchase from
Sellers certain Mortgage Loans defined as Eligible Loans, such terms being
defined in the Agreement, whose other defined terms shall also apply to this
Pledge.

 

B.                                     As partial
consideration for Bank entering into the Agreement and purchasing Eligible
Loans, each Seller has agreed to assign and pledge to Bank and grant Bank a
security interest in and to certain deposit accounts described herein.

 

NOW,
THEREFORE, for and in consideration of the matters set forth above and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

Each
Seller does hereby assign and pledge as collateral for the purpose of securing
the performance by Sellers of all of Seller’s obligations under the Agreement
all right, title and interest of Sellers in and to the following deposit
accounts maintained with Buyer: 
(a) an interest bearing account to satisfy Sellers’ obligation to
maintain on deposit with Buyer certain amounts required under the Agreement
(the “Cash Collateral Account”), and (b) two non interest bearing accounts
to receive the proceeds of any funds to which a Seller is entitled upon the
sale by Seller of repurchased Eligible Loans to Approved Takeout Investors or
otherwise to receive payments or other amounts due from any Seller to Buyer
(the “Settlement Accounts”) (hereinafter collectively called the “Accounts”),
which are more particularly described as follows:

 

(a)                                  Cash Collateral
Account — Bank account number: CD 178038725

(b)                                 Excel
Settlement Account—Bank account number: 8003001248

(c)                                  Synergy
Settlement Account—Bank account number: 8003001313

 

Each
Account will be a blocked account. 
Should an Event of Default occur under the Agreement then Bank may
enforce this Pledge in any manner provided by law and charge all or any portion
of any sums owing under the Agreement for any reason as provided under the
Agreement or herein, to the extent of the withdrawal value of said Accounts.  Should such Event of Default occur, Bank may
proceed against the Accounts without exhausting its remedies against any
parties liable under the Agreement or against any other security therefor
whether in court, by foreclosure, or otherwise, and this Pledge may be enforced
and all sums due under said Agreement or under the instruments executed in
connection therewith shall be charged to the

 

1

 

aforesaid
withdrawal value of such pledged Accounts to the extent thereof and the Sellers
shall be jointly and severally liable for the excess, if any.

 

Sellers
shall maintain said Accounts with Bank for the full term of this Pledge.

 

Nothing
in the foregoing paragraph shall be construed as requiring Bank to enforce this
Pledge.  Bank’s failure to do so on one
or more occasions shall not affect Bank’s right so to do; nor will enforcement
of such Pledge for less than the full value of the said pledged Accounts impair
the effectiveness of the Pledge as to the remaining value thereof.  Bank may elect to enforce its right under the
Agreement without resort to the remedies provided in this instrument; in such
event the terms of the other documents alone referred to above shall be
controlling and no provision hereof shall be construed as requiring Bank to
perform any condition precedent to the enforcement of the Agreement and the
documents executed in connection therewith against any and all parties thereto.

 

However,
Bank expressly agrees that at such times as the obligations of Sellers under
the Agreement have been performed and satisfied without the necessity of Bank
exercising its rights hereunder or under the Agreement and any related
documents, and no defense against the obligations under the Agreement or
adverse claims of ownership to any such security is being asserted, then the
Bank shall waive enforcement of this Pledge as to any amounts available in said
Accounts in excess of Sellers’ outstanding obligations to Buyer under the
Agreement.

 

From
and after the occurrence of an Event of Default under the Agreement or default
under any other documents executed in connection therewith, each Seller
authorizes Bank, at Bank’s option, to collect and receipt for any and all sums
becoming due upon the pledged Accounts, such sums to be held by Bank without
liability for interest thereon and applied toward the performance of Sellers’
obligations under the Agreement and any other documents executed in connection
therewith hereby secured.  Bank shall
have the full control of the pledged Accounts until they are released in
accordance herewith.

 

Bank,
in addition to the rights and remedies provided for in the preceding
paragraphs, shall have all the rights and remedies of a secured party under the
Uniform Commercial Code of California and Bank shall be entitled to avail
itself of all such other rights and remedies as may now or hereafter exist at
law or in equity for the performance of all obligations under the Agreement and
the foreclosure of the security interest created hereby and the resort to any
remedy provided hereunder or provided by the Uniform Commercial Code of
California, or by any other law of California, shall not prevent the concurrent
employment of any other appropriate remedy or remedies.

 

Bank
may remedy any Event of Default, without waiving same, or may waive any Event
of Default without waiving any prior or subsequent Event of Default.

 

The
security interest herein created shall not be affected by or affect any other
security taken for the performance of obligations under the Agreement hereby
secured, or any part thereof, and any extensions may be made for the
performance of such obligations without affecting the priority of this pledge
or the validity thereof with reference to any third party, and

 

2

 

Bank
or its successors shall not be limited by any election of remedies if it
chooses to foreclose this security interest by suit.

 

Each
Seller further represents to and covenants and agrees with Bank that such
Seller will at any time or from time to time, upon the written request of Bank,
execute and deliver such further documents and do such other acts and things as
Bank may specify for the purpose of further assurance and of effecting the
purposes of this Pledge, and otherwise do any and all things and acts
whatsoever which Bank may request in order to perfect this Pledge.

 

The
law governing this Pledge shall be the Uniform Commercial Code as adopted in
California and other applicable laws of the State of California, and this Pledge
shall be performable in Los Angeles County, California.  All terms used herein which are defined in
the Uniform Commercial Code of California shall have the same meaning herein as
in said Code.

 

If
any clause or provision of this Pledge is illegal, invalid, or unenforceable,
under present or future laws effective during the term hereof, then it is the
intention of the parties hereto that the remainder of this Pledge shall not be
affected thereby, and it is also the intention of the parties hereto that in
lieu of each clause or provision that is illegal, invalid or unenforceable,
there be added as a part of this Pledge a clause or provision as similar in
terms to such illegal, invalid or unenforceable clause or provision as may be
possible and be legal, valid and enforceable.

 

The
Accounts evidencing such Pledge are delivered herewith or are authorized to be
held by Bank.

 

The
term of this Pledge shall begin on the date hereof and shall expire upon the
occurrence of (i) the termination of the Agreement, and (ii) the full
and final satisfaction of all obligations of Sellers under the Agreement.

 

	
  SELLER:

  	
   

  
	
   

  	
   

  
	
  SYNERGY CAPITAL MORTGAGE CORP.

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/
  William Ashmore

  	
   

  
	
  Name:

  	
  William
  Ashmore

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  SELLER:

  	
   

  
	
   

  	
   

  
	
  EXCEL MORTGAGE
  SERVICING, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/
  William Ashmore

  	
   

  
	
  Name:

  	
  William
  Ashmore

  	
   

  
	
  Title:

  	
  President

  	
   

  

 

3

 

ACCEPTED
AND AGREED TO:

 

EAST
WEST BANK

 

	
  By

  	
  /s/
  Robert Lo

  	
   

  
	
  Name:

  	
  Robert
  Lo

  	
   

  
	
  Title:

  	
  SVP

  	
   

  
					

 

4

 

EXHIBIT D

 

GUARANTY AGREEMENT

 

1.             FOR VALUE RECEIVED, the undersigned
INTEGRATED REAL ESTATE SERVICE CORP., a California corporation (hereinafter
called “Guarantor”, whether one or more), hereby jointly and severally (if more
than one), unconditionally, absolutely and irrevocably guarantees the full and
timely payment and performance of each and every covenant, agreement,
undertaking and obligation (collectively the “Obligations”) made by SYNERGY
CAPITAL MORTGAGE CORP. and EXCEL MORTGAGE SERVICING, INC. (collectively,
the “Obligor”) to or for the benefit of EAST WEST BANK (“Bank”), as set forth
in that certain Master Repurchase Agreement (the “Agreement”), dated
June 24, 2010, executed by Obligor and Bank, relating to the purchase and
repurchase of interests in various mortgage loans, as said Agreement may be
amended from time to time.

 

2.             Guarantor expressly waives
diligence on the part of said Bank in the collection or enforcement of the
Obligations, whether fixed or contingent, and waives presentment, protest,
notice of protest, dishonor, notice of acceptance of this Guaranty, notice of
non-performance, demands for performance and approval of any modifications,
renewals or extensions of the Obligations that may be granted to the
Obligor.  Bank shall be under no
obligation to notify any of the Guarantors of its acceptance of this Guaranty,
nor of any advances made or credit extended or participations purchased on the
faith hereof, nor of the failure of said Obligor to pay and perform the
Obligations, nor to use diligence in preserving the liability of any entity or
person on said Obligations whether fixed or contingent, nor in bringing suit to
enforce collection or enforcement of the Obligations secured by this Guaranty,
nor of notice of any instruments now or hereafter executed in favor of Bank
evidencing or securing said indebtedness. 
Guarantor individually and severally further agrees to pay reasonable
attorney’s fees and litigation costs and expenses should this Guaranty be
placed in the hands of an attorney for enforcement, or should it be enforced
through any court.

 

3.             Guarantor agrees that this is a
continuing Guaranty, but shall be limited to the Obligations as described in
Paragraph 1 above together with any modifications, revisions, extensions or any
expenses incurred in connection therewith, and that it may be enforced by Bank
without first resorting to or exhausting any security or collateral, or without
first having exhausted other rights and remedies of Bank against Obligor.  Further, Bank shall not be required to
exhaust its remedies against accommodation makers, sureties and endorsers or
any other guarantors.  Pursuit by Bank of
any of its remedies shall not impair this Guaranty and shall not be deemed an
election of remedies.  To the extent
permitted by law, Guarantor waives the benefit of any statute of limitation
affecting Guarantor’s liability hereunder or the manner or mode of enforcement
thereof.

 

4.             Guarantor consents, without
affecting Guarantor’s liability to Bank hereunder, that the Bank may, without
notice to or consent of Guarantor, upon such terms as it may deem advisable,
(a) modify the Obligations by modification of the Agreement,
(b) purchase Mortgage Loans pursuant to the Agreement, thus increasing the
Obligations, or (c) settle or compromise any claim of the Bank against the
Obligor, or against any other person, firm or corporation.

 

1

 

Guarantor
hereby ratifies and affirms any such modification, participations, settlement
or compromise; and waives all defenses, counterclaims or offsets which the
Guarantor might have by reason thereof. 
Notwithstanding anything to the contrary contained herein, in any other
Transaction Document or in any other agreement between Guarantor and the Bank,
the Bank shall not have a right of offset or set off or any other right to
assert ownership of, or control or dominion over, any Guarantor balances or
deposits held by or deposited with the Bank or any Affiliate of the Bank.

 

5.             If any or all of the Obligations
hereby guaranteed be secured, Guarantor agrees that the Bank may from time to
time, at its discretion, with or without valuable consideration, allow release,
surrender, substitution, exchange, subordination, loss or withdrawal of
security or collateral, and should the Obligor execute in favor of said Bank
any collateral agreement, the exercise by the Bank of any right conferred upon
it in said agreement shall be wholly discretionary with the Bank, and such
exercise of, or failure to exercise such right shall in no way impair or
diminish the obligations of Guarantor hereunder.  Bank may, without in any manner impairing or
diminishing the obligations of the Guarantor hereunder, elect to pursue any
available remedy against Obligor or against any security held by Bank, whether
or not the exercise by Bank of any such remedy shall result in loss to
Guarantor of any right of subrogation or right to proceed against Obligor for
reimbursement.

 

6.             In the event Obligor is a
corporation, joint stock association or partnership, or is hereafter
incorporated; if the Obligations at any time hereafter exceed the amount permitted
by law, if the Obligations are at any time hereafter deemed to be usurious, or
Obligor is not liable because the act of creating the Obligations are ultra
vires, or the officers or persons creating same acted in excess of their
authority, and for these reasons the Obligations to the Bank which Guarantor
agreed to pay cannot be enforced against Obligor, such facts shall in no manner
affect Guarantor’s liability hereunder, but Guarantor shall be liable
hereunder, notwithstanding that Obligor is not liable for such Obligations, and
to the same extent as Guarantor would have been if the Obligations of the
Obligor had been enforceable against it.

 

7.             Guarantor further agrees that this
Guaranty shall not be discharged, impaired or affected by (a) the transfer
by the Obligor of all or any portion of the Mortgage Loans contemplated by the
Agreement, or (b) any defense (other than the full payment of the
Obligations hereby guaranteed in accordance with the terms hereof) that the
Guarantor may or might have as to Guarantor’s respective undertakings,
liabilities and obligations hereunder, each and every such defense being hereby
waived by the undersigned Guarantor.

 

8.             Should the status of Obligor
change, this Guaranty shall continue and also cover the Obligations of Obligor
under the new status, according to the terms hereof guaranteeing the
Obligations of the original Obligor.

 

9.             Guarantor waives any defense
arising by reason of any disability or other defense of the Obligor or by
reason of the cessation from any cause whatsoever of the liability of
Obligor.  Until all the Obligations of
the Obligor to Bank shall have been paid in full, Guarantor shall have no right
of subrogation, and waives any right to enforce any remedy which Bank now has
or may hereafter have against the Obligor; and Guarantor waives any benefit of,
and any right to participate in, any security now or hereafter held by Bank.

 

2

 

10.           This Guaranty shall remain and
continue in full force and effect notwithstanding the institution by or against
the Obligor of bankruptcy, reorganization, readjustment, receivership or
insolvency proceedings of any nature, or the disaffirmation of the said
Obligations in any such proceedings, or otherwise.

 

11.           In the event any payment made by
Obligor to Bank with respect to the Obligations is held to constitute a
preference under the U.S. Bankruptcy Code, or if for any other reason Bank is
required to refund such payment or pay the amount thereof to any other party, such
a payment shall not constitute a release of Guarantor from any liability
hereunder, but Guarantor agrees to pay such amount to Bank upon demand.

 

12.           In the event any or all of the
Guarantors are corporations, each such Guarantor warrants and represents that
it has authority to execute and deliver this Guaranty and agrees that it will
do all things necessary to preserve and keep in full force and effect its
existence, franchises, rights and privileges as a business or stock corporation
under the laws of the state of its incorporation.

 

13.           To the extent permitted by law,
Guarantor expressly waives and relinquishes all rights and remedies of
suretyship, including, but not limited to, all rights and remedies provided
under sections 2787 through 2856 of the Civil Code of the State of California.

 

14.           This Guaranty is for the benefit of
Bank, its successors and assigns, and in the event of an assignment by the
Bank, its successors or assigns, of the Obligations, or any part thereof, the
rights and benefits hereunder shall be transferred with such Obligations
without further act on the part of Bank and without notice to Guarantor.

 

15.           Suit may be brought against the
Guarantor or against any other guarantor without impairing the rights of Bank,
its successors or assigns, against any guarantor, and the Bank may compromise
or settle with any guarantor for such sum or sums as it may see fit and release
such guarantor from all further liability to Bank for the Obligations without
impairing the right of the Bank to demand and collect the balance of the
Obligations from other guarantors not so released; but it is agreed, however,
that such compromise, settlement and release shall in no way impair the rights
of the guarantors as among themselves.

 

16.           In the event of the death of any
Guarantor hereunder, the obligation of the deceased shall continue in full
force and effect against his or her estate or beneficiaries as to all
Obligations which shall have been created or incurred by the Obligor prior to
the time when the Bank shall have received notice, in writing, of such death;
and this Guaranty shall from the date of such death as to all Obligations
created, incurred or arising after such death remain and continue in full force
as a Guaranty by the surviving guarantors.

 

17.           Guarantor, individually and
severally, expressly agrees that this contract is performable in the Los
Angeles County, California.

 

18.           The invalidity or unenforceability in
any particular circumstances of any provision of this Guaranty shall not extend
beyond such provision or such circumstances, and no other provision of this
instrument shall be affected thereby.

 

3

 

19.           Guarantor acknowledges and agrees
that Guarantor has received and reviewed a copy of the Agreement and all other
documents executed in connection with the Agreement.

 

20.           Any notice or demand required
hereunder shall be deemed to be delivered when deposited in the United States
mail, postage prepaid, certified mail, return receipt requested, addressed to
Guarantor or Bank, as the case may be, at the address set out in the Agreement
for the Bank and as set forth below for Guarantor or at such other address as
such party may hereafter deliver in accordance herewith.  Any other method of delivery or demand shall
be effective only when actually received by the recipient thereof. If and when
included within the term “Guarantor” or “Bank” there are more than one person,
all shall jointly arrange among themselves for their joint execution and delivery
of a notice to the other specifying some person at some specific address for
the receipt of all notices, demands, payments or other documents.  All persons included within the terms “Guarantor”
or “Bank”, respectively, shall be bound by notices, demands, payments and
documents given in accordance with the provisions of this Paragraph to the same
extent as if each had received such notice, demand, payment or document.

 

21.           To the extent permitted by law,
Guarantor further hereby waives and agrees not to assert or take advantage of:

 

a.             Any right to require Bank to
proceed against Obligor or (if Obligor is a limited liability company) any
members of Obligor or any other indemnitor or guarantor of the indebtedness and
obligations guaranteed hereby or any other person or to proceed against or
exhaust any security held by Bank at any time or to pursue any other remedy in
Bank’s power or under any other agreement before proceeding against any
Guarantor hereunder;

 

b.             (i) any defense based upon an
election of remedies by Bank, even though such election destroys or otherwise
impairs the subrogation rights of Guarantor or the right of Guarantor (after
payment of the obligations guaranteed by Guarantor under this Guaranty) to
proceed against Obligor for reimbursement, or both, and (ii) any and all
rights or defenses Guarantor may have by reason of protection afforded to
Obligor with respect to any of the obligations of Guarantor under this Guaranty
pursuant to the antideficiency or other laws of the State of California
limiting or discharging Obligor’s indebtedness;

 

c.             Any right or claim or right to
cause a marshaling of the assets of Guarantor;

 

d.             Any duty on the part of Bank to
disclose to Guarantor any facts Bank may now or hereafter know about Obligor,
regardless of whether Bank has reason to believe that any such facts materially
increase the risk beyond that which Guarantor intended to assume or has reason
to believe that such facts are unknown to Guarantor or has a reasonable
opportunity to communicate such facts to Guarantor, it being understood and
agreed that Guarantor is fully responsible for being and keeping informed of
the financial condition of Obligor and of any and all circumstances bearing on
the risk that liability may be incurred by Guarantor

 

e.             Any lack of notice of disposition
or of manner of disposition of any collateral;

 

4

 

f.              Any invalidity, irregularity or
unenforceability, in whole or in part, of any one or more of the Transaction
Documents;

 

g.             Any deficiencies in the collateral
or any deficiency in the ability of Bank to collect or to obtain performance
from any persons or entities now or hereafter liable for the payment and
performance of any obligation hereby guaranteed;

 

h.             Any assertion or claim that the
automatic stay provided by 11 U.S.C. §362 (arising upon the voluntary or
involuntary bankruptcy proceeding of Obligor) or any other stay provided under
any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which
may be or become applicable, shall operate or be interpreted to stay,
interdict, condition, reduce or inhibit the ability of Bank to enforce any of
its rights, whether now or hereafter required, which Bank may have against
Guarantor or the collateral;

 

i.              Any modifications of the
Transaction Documents or any obligation of Obligor by operation of law or by
action of any court, whether pursuant to the Bankruptcy Reform Act of 1978, as
amended, or any other debtor relief law (whether statutory, common law, case
law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
or otherwise;

 

j.              Any action, occurrence, event or
matter consented to by Guarantor under Section 20(d) hereof, under
any other provision hereof, or otherwise;

 

k.             Any and all benefits and defenses
under California Civil Code Section 2810;

 

l.              Any and all benefits and defenses
under California Civil Code Section 2809;

 

m.            All principles or provisions of law,
statutory or otherwise, which are or might be in conflict with the terms of
this Guaranty.  By doing so, Guarantor
agrees that Guarantor’s obligations shall not be affected by any circumstances,
whether or not referred to in this Guaranty, which might otherwise constitute a
legal or equitable discharge of a surety or guarantor; and

 

o.             Any right of discharge under any
and all statutes or other laws relating to guarantors or sureties and any other
rights of sureties and guarantors thereunder.

 

Guarantor understands that the exercise by Bank of certain rights and
remedies contained in the Transaction Documents may affect or eliminate
Guarantor’s right of subrogation against Obligor and that Guarantor may
therefore incur a partially or totally nonreimbursable liability under this
Guaranty.  Nevertheless, Guarantor hereby
authorizes and empowers Bank to exercise, in its sole and absolute discretion,
any right or remedy, or any combination thereof, which may then be available,
since it is the intent and purpose of Guarantor that the obligations under this
Guaranty shall be absolute, independent and unconditional under any and all
circumstances.

 

In accordance with Section 2856 of the California Civil Code,
Guarantor also waives any right or defense based upon an election of remedies
by Bank , even though

 

5

 

such
election destroys or otherwise impairs the subrogation rights of Guarantor or
the rights of Guarantor (after payment of the obligations guaranteed by
Guarantor under this Guaranty) to proceed against Obligor for reimbursement, or
both.

 

In accordance with Section 2856 of the California Civil Code,
Guarantor waives any and all other rights and defenses available to Guarantor
by reason of Sections 2787 through 2856, inclusive, of the California
Civil Code, including any and all rights or defenses Guarantor may have by
reason of protection afforded to Obligor with respect to any of the obligations
of Guarantor under this Guaranty pursuant to the antideficiency or other laws of
the State of California limiting or discharging Obligor’s indebtedness.  Likewise, Guarantor waives any and all rights
and defenses available to Guarantor under California Civil Code
Sections 2899 and 3433

 

Guarantor shall have no right of, and hereby waives any claim for,
subrogation, reimbursement, indemnification, and contribution against Obligor
and against any general partner, member or other constituent of Obligor, and
against any other person or any collateral or security for the indebtedness (including
without limitation any such rights pursuant to Sections 2847 and 2848 of
the California Civil Code), until the indebtedness has been indefeasibly paid
and satisfied in full and all outstanding obligations owed to Bank under the
Transaction Documents have been fully performed.

 

EXECUTED
effective as of the 24th day of June, 2010.

 

INTEGRATED
REAL ESTATE SERVICE CORP.

 

	
  By:

  	
  /s/
  William Ashmore

  	
   

  
	
  Name:

  	
  William
  Ashmore

  	
   

  
	
  Title:

  	
  President

  	
   

  
					

 

 

GUARANTOR
ADDRESS FOR NOTICE

 

Integrated
Real Estate Service Corp.

19500 Jamboree Road

Irvine, CA  92612

Attention:  Ron Morrison, Executive Vice
President and General Counsel

Telephone:  949-475-3942

Facsimile:  949-708-6208

Email:  ron.morrison@impaccompanies.com

 

6

 

ACKNOWLEDGMENT

 

State
of California

 

County
of Orange

 

On                       ,
before me,                                                                      ,
personally appeared
                           ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the
instrument.

 

I
certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.

 

WITNESS
my hand and official seal.

 

	
   

  	
   

  	
  [SEAL]

  
	
  [Signature
  of Notary]

  	
   

  

 

7

 

EXHIBIT E

 

Date:

 

Name

Address

City, State

Attention:  Correspondent Lending

 

Re:  Bailment Letter Agreement

 

Dear
Sir or Madam:

 

In
connection with the proposed acquisition by
                    
(“Purchaser”) of the mortgage loans identified on the mortgage loan schedule
attached hereto as Exhibit A (the “Mortgage Loans”),
                    
(“Bailee”) hereby acknowledges its receipt from East West Bank of mortgage loan
files (each a “Mortgage Loan File”) with respect to each of the Mortgage
Loans.  Each Mortgage Loan File contains
mortgage loan documents, including an original mortgage note endorsed in blank
by the last holder of such mortgage note.

 

Bailee
hereby agrees to act, with respect to each of the Mortgage Loan Files, as the
custodian and bailee for East West Bank prior to the sale of the Mortgage Loans
to the Purchaser, and to hold the Mortgage Loan Files solely for the purpose of
reviewing the Mortgage Loan Files on behalf of the Purchaser.

 

Upon
the written direction of East West Bank, if the Purchaser fails to purchase one
or more of the Mortgage Loans from East West Bank, Bailee shall promptly
redeliver the related Mortgage Loan Files to East West Bank.  Such redelivery shall be at the sole cost and
expense of the Purchaser.

 

Bailee
hereby agrees to indemnify East West Bank and hold it harmless against any and
all losses, damages, penalties, fines forfeitures, reasonable and necessary
legal fees and related costs, judgments and other costs and expenses resulting
from, the loss of, or damage to, any documents held under any Mortgage Loan
File during the period such Mortgage Loan file is held by Bailee or in
connection with the redelivery thereof by Bailee to East West Bank.

 

Upon
its receipt of written confirmation from East West Bank that the Purchaser has
paid East West Bank the purchase price for the Mortgage Loans and that such
purchase price is in an amount not less than
$                  ,
the Mortgage Loan files shall be released to Bailee for the benefit of the
Purchaser and East West Bank’s security interest therein shall be deemed
released.

 

Except
to the extent specifically provided hereunder, prior to the payment of the
purchase price for the Mortgage Loans by the Purchaser, Bailee shall not honor
any communications from any third party relating to the Mortgage Loan Files, or
deliver the Mortgage Loan Files to any third party, without the prior written
consent of East West Bank.

 

Please
send all loan proceeds in accordance with the following wire instructions:

 

1

 

	
  Bank:

  	
   

  	
   

  
	
  ABA:

  	
   

  	
   

  
	
  Acct.:

  	
   

  	
   

  
	
  Acct.
  Name:

  	
   

  	
   

  
	
  Attn.:

  	
   

  	
   

  

 

REFERENCE:

 

Contact
Info.:

 

Please
confirm that the foregoing specifies the terms of our agreement by signing and
faxing the enclosed copy of this letter to East West Bank, facsimile number
            .

 

Very
truly yours,

 

East
West Bank

 

	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Confirmed
  and Agreed to:

  	
   

  
	
   

  	
   

  
	
  [BAILEE]

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
								

 

2

 

EXHIBIT A

 

MORTGAGE LOAN SCHEDULE

 

	
  Loan
  Number

  	
   

  	
  Borrowers

  	
   

  	
  Loan Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1

 

PLEDGE AGREEMENT

 

This
PLEDGE AGREEMENT (this “Pledge”) is executed as of June 24, 2010, by and
between SYNERGY CAPITAL MORTGAGE CORP. and EXCEL MORTGAGE SERVICING, INC. (each a “Seller” and,
collectively, the “Sellers”), and EAST WEST BANK
(“Bank”).

 

RECITALS

 

A.            Bank has agreed with Sellers
pursuant to that certain Master Repurchase Agreement (the “Agreement”) dated  June 24, 2010, to purchase from Sellers certain
Mortgage Loans defined as Eligible Loans, such terms being defined in the
Agreement, whose other defined terms shall also apply to this Pledge.

 

B.            As partial consideration for
Bank entering into the Agreement and purchasing Eligible Loans, each Seller has
agreed to assign and pledge to Bank and grant Bank a security interest in and
to certain deposit accounts described herein.

 

NOW,
THEREFORE, for and in consideration of the matters set forth above and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

Each
Seller does hereby assign and pledge as collateral for the purpose of securing
the performance by Sellers of all of Seller’s obligations under the Agreement
all right, title and interest of Sellers in and to the following deposit
accounts maintained with Buyer: 
(a) an interest bearing account to satisfy Sellers’ obligation to
maintain on deposit with Buyer certain amounts required under the Agreement
(the “Cash Collateral Account”), and (b) two non interest bearing accounts
to receive the proceeds of any funds to which a Seller is entitled upon the
sale by Seller of repurchased Eligible Loans to Approved Takeout Investors or
otherwise to receive payments or other amounts due from any Seller to Buyer
(the “Settlement Accounts”) (hereinafter collectively called the “Accounts”),
which are more particularly described as follows:

 

(a)           Cash Collateral Account —
Bank account number: CD 178038725

(b)           Excel Settlement
Account—Bank account number: 8003001248

(c)           Synergy Settlement
Account—Bank account number: 8003001313

 

Each
Account will be a blocked account. 
Should an Event of Default occur under the Agreement then Bank may enforce
this Pledge in any manner provided by law and charge all or any portion of any
sums owing under the Agreement for any reason as provided under the Agreement
or herein, to the extent of the withdrawal value of said Accounts.  Should such Event of Default occur, Bank may
proceed against the Accounts without exhausting its remedies against any
parties liable under the Agreement or against any other security therefor
whether in court, by foreclosure, or otherwise, and this Pledge may be enforced
and all sums due under said Agreement or under the instruments executed in
connection therewith shall be charged to the aforesaid withdrawal value of

 

1

 

such
pledged Accounts to the extent thereof and the Sellers shall be jointly and
severally liable for the excess, if any.

 

Sellers
shall maintain said Accounts with Bank for the full term of this Pledge.

 

Nothing
in the foregoing paragraph shall be construed as requiring Bank to enforce this
Pledge.  Bank’s failure to do so on one
or more occasions shall not affect Bank’s right so to do; nor will enforcement
of such Pledge for less than the full value of the said pledged Accounts impair
the effectiveness of the Pledge as to the remaining value thereof.  Bank may elect to enforce its right under the
Agreement without resort to the remedies provided in this instrument; in such
event the terms of the other documents alone referred to above shall be
controlling and no provision hereof shall be construed as requiring Bank to
perform any condition precedent to the enforcement of the Agreement and the
documents executed in connection therewith against any and all parties thereto.

 

However,
Bank expressly agrees that at such times as the obligations of Sellers under
the Agreement have been performed and satisfied without the necessity of Bank
exercising its rights hereunder or under the Agreement and any related
documents, and no defense against the obligations under the Agreement or
adverse claims of ownership to any such security is being asserted, then the
Bank shall waive enforcement of this Pledge as to any amounts available in said
Accounts in excess of Sellers’ outstanding obligations to Buyer under the
Agreement.

 

From
and after the occurrence of an Event of Default under the Agreement or default
under any other documents executed in connection therewith, each Seller
authorizes Bank, at Bank’s option, to collect and receipt for any and all sums
becoming due upon the pledged Accounts, such sums to be held by Bank without
liability for interest thereon and applied toward the performance of Sellers’
obligations under the Agreement and any other documents executed in connection
therewith hereby secured.  Bank shall
have the full control of the pledged Accounts until they are released in
accordance herewith.

 

Bank,
in addition to the rights and remedies provided for in the preceding
paragraphs, shall have all the rights and remedies of a secured party under the
Uniform Commercial Code of California and Bank shall be entitled to avail
itself of all such other rights and remedies as may now or hereafter exist at
law or in equity for the performance of all obligations under the Agreement and
the foreclosure of the security interest created hereby and the resort to any
remedy provided hereunder or provided by the Uniform Commercial Code of
California, or by any other law of California, shall not prevent the concurrent
employment of any other appropriate remedy or remedies.

 

Bank
may remedy any Event of Default, without waiving same, or may waive any Event
of Default without waiving any prior or subsequent Event of Default.

 

The
security interest herein created shall not be affected by or affect any other
security taken for the performance of obligations under the Agreement hereby secured,
or any part thereof, and any extensions may be made for the performance of such

 

2

 

obligations
without affecting the priority of this pledge or the validity thereof with
reference to any third party, and Bank or its successors shall not be limited
by any election of remedies if it chooses to foreclose this security interest
by suit.

 

Each
Seller further represents to and covenants and agrees with Bank that such
Seller will at any time or from time to time, upon the written request of Bank,
execute and deliver such further documents and do such other acts and things as
Bank may specify for the purpose of further assurance and of effecting the
purposes of this Pledge, and otherwise do any and all things and acts
whatsoever which Bank may request in order to perfect this Pledge.

 

The
law governing this Pledge shall be the Uniform Commercial Code as adopted in
California and other applicable laws of the State of California, and this
Pledge shall be performable in Los Angeles County, California.  All terms used herein which are defined in
the Uniform Commercial Code of California shall have the same meaning herein as
in said Code.

 

If
any clause or provision of this Pledge is illegal, invalid, or unenforceable,
under present or future laws effective during the term hereof, then it is the
intention of the parties hereto that the remainder of this Pledge shall not be
affected thereby, and it is also the intention of the parties hereto that in
lieu of each clause or provision that is illegal, invalid or unenforceable,
there be added as a part of this Pledge a clause or provision as similar in
terms to such illegal, invalid or unenforceable clause or provision as may be
possible and be legal, valid and enforceable.

 

The
Accounts evidencing such Pledge are delivered herewith or are authorized to be
held by Bank.

 

The
term of this Pledge shall begin on the date hereof and shall expire upon the
occurrence of (i) the termination of the Agreement, and (ii) the full
and final satisfaction of all obligations of Sellers under the Agreement.

 

SELLER:

 

	
  SYNERGY
  CAPITAL MORTGAGE CORP.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  William Ashmore

  	
   

  
	
  Name:

  	
  William
  Ashmore

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
  SELLER:

  	
   

  
	
   

  	
   

  
	
  EXCEL
  MORTGAGE SERVICING, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  William Ashmore

  	
   

  
	
  Name:

  	
  William
  Ashmore

  	
   

  
	
  Title:

  	
  President

  	
   

  
								

 

3

 

ACCEPTED
AND AGREED TO:

 

	
  EAST
  WEST BANK

  
	
  By:

  	
  /s/
  Robert Lo

  	
   

  
	
  Name:

  	
  Robert
  Lo

  	
   

  
	
  Title:

  	
  SVP

  	
   

  
					

 

4

 

GUARANTY AGREEMENT

 

1.             FOR VALUE RECEIVED, the
undersigned INTEGRATED REAL ESTATE SERVICE CORP., a California corporation
(hereinafter called “Guarantor”, whether one or more), hereby jointly and
severally (if more than one), unconditionally, absolutely and irrevocably
guarantees the full and timely payment and performance of each and every
covenant, agreement, undertaking and obligation (collectively the “Obligations”)
made by SYNERGY CAPITAL MORTGAGE CORP. and EXCEL MORTGAGE SERVICING, INC.
(collectively, the “Obligor”) to or for the benefit of EAST WEST BANK (“Bank”),
as set forth in that certain Master Repurchase Agreement (the “Agreement”),
dated June 24, 2010, executed by Obligor and Bank, relating to the
purchase and repurchase of interests in various mortgage loans, as said
Agreement may be amended from time to time.

 

2.             Guarantor expressly waives
diligence on the part of said Bank in the collection or enforcement of the
Obligations, whether fixed or contingent, and waives presentment, protest,
notice of protest, dishonor, notice of acceptance of this Guaranty, notice of
non-performance, demands for performance and approval of any modifications,
renewals or extensions of the Obligations that may be granted to the
Obligor.  Bank shall be under no
obligation to notify any of the Guarantors of its acceptance of this Guaranty,
nor of any advances made or credit extended or participations purchased on the
faith hereof, nor of the failure of said Obligor to pay and perform the
Obligations, nor to use diligence in preserving the liability of any entity or
person on said Obligations whether fixed or contingent, nor in bringing suit to
enforce collection or enforcement of the Obligations secured by this Guaranty,
nor of notice of any instruments now or hereafter executed in favor of Bank
evidencing or securing said indebtedness. 
Guarantor individually and severally further agrees to pay reasonable
attorney’s fees and litigation costs and expenses should this Guaranty be
placed in the hands of an attorney for enforcement, or should it be enforced
through any court.

 

3.             Guarantor agrees that this
is a continuing Guaranty, but shall be limited to the Obligations as described
in Paragraph 1 above together with any modifications, revisions, extensions or
any expenses incurred in connection therewith, and that it may be enforced by
Bank without first resorting to or exhausting any security or collateral, or
without first having exhausted other rights and remedies of Bank against
Obligor.  Further, Bank shall not be
required to exhaust its remedies against accommodation makers, sureties and
endorsers or any other guarantors. 
Pursuit by Bank of any of its remedies shall not impair this Guaranty
and shall not be deemed an election of remedies.  To the extent permitted by law, Guarantor
waives the benefit of any statute of limitation affecting Guarantor’s liability
hereunder or the manner or mode of enforcement thereof.

 

4.             Guarantor consents, without
affecting Guarantor’s liability to Bank hereunder, that the Bank may, without
notice to or consent of Guarantor, upon such terms as it may deem advisable,
(a) modify the Obligations by modification of the Agreement,
(b) purchase Mortgage Loans pursuant to the Agreement, thus increasing the
Obligations, or (c) settle or compromise any claim of the Bank against the
Obligor, or against any

 

1

 

other
person, firm or corporation.  Guarantor
hereby ratifies and affirms any such modification, participations, settlement
or compromise; and waives all defenses, counterclaims or offsets which the
Guarantor might have by reason thereof. 
Notwithstanding anything to the contrary contained herein, in any other
Transaction Document or in any other agreement between Guarantor and the Bank,
the Bank shall not have a right of offset or set off or any other right to
assert ownership of, or control or dominion over, any Guarantor balances or
deposits held by or deposited with the Bank or any Affiliate of the Bank.

 

5.             If any or all of the
Obligations hereby guaranteed be secured, Guarantor agrees that the Bank may
from time to time, at its discretion, with or without valuable consideration,
allow release, surrender, substitution, exchange, subordination, loss or
withdrawal of security or collateral, and should the Obligor execute in favor
of said Bank any collateral agreement, the exercise by the Bank of any right
conferred upon it in said agreement shall be wholly discretionary with the
Bank, and such exercise of, or failure to exercise such right shall in no way impair
or diminish the obligations of Guarantor hereunder.  Bank may, without in any manner impairing or
diminishing the obligations of the Guarantor hereunder, elect to pursue any
available remedy against Obligor or against any security held by Bank, whether
or not the exercise by Bank of any such remedy shall result in loss to
Guarantor of any right of subrogation or right to proceed against Obligor for
reimbursement.

 

6.             In the event Obligor is a
corporation, joint stock association or partnership, or is hereafter
incorporated; if the Obligations at any time hereafter exceed the amount
permitted by law, if the Obligations are at any time hereafter deemed to be
usurious, or Obligor is not liable because the act of creating the Obligations
are ultra vires, or the officers or persons creating same acted in excess of
their authority, and for these reasons the Obligations to the Bank which
Guarantor agreed to pay cannot be enforced against Obligor, such facts shall in
no manner affect Guarantor’s liability hereunder, but Guarantor shall be liable
hereunder, notwithstanding that Obligor is not liable for such Obligations, and
to the same extent as Guarantor would have been if the Obligations of the
Obligor had been enforceable against it.

 

7.             Guarantor further agrees
that this Guaranty shall not be discharged, impaired or affected by
(a) the transfer by the Obligor of all or any portion of the Mortgage
Loans contemplated by the Agreement, or (b) any defense (other than the
full payment of the Obligations hereby guaranteed in accordance with the terms
hereof) that the Guarantor may or might have as to Guarantor’s respective
undertakings, liabilities and obligations hereunder, each and every such
defense being hereby waived by the undersigned Guarantor.

 

8.             Should the status of Obligor
change, this Guaranty shall continue and also cover the Obligations of Obligor
under the new status, according to the terms hereof guaranteeing the
Obligations of the original Obligor.

 

9.             Guarantor waives any defense
arising by reason of any disability or other defense of the Obligor or by
reason of the cessation from any cause whatsoever of the

 

2

 

liability
of Obligor.  Until all the Obligations of
the Obligor to Bank shall have been paid in full, Guarantor shall have no right
of subrogation, and waives any right to enforce any remedy which Bank now has
or may hereafter have against the Obligor; and Guarantor waives any benefit of,
and any right to participate in, any security now or hereafter held by Bank.

 

10.           This Guaranty shall remain
and continue in full force and effect notwithstanding the institution by or
against the Obligor of bankruptcy, reorganization, readjustment, receivership
or insolvency proceedings of any nature, or the disaffirmation of the said
Obligations in any such proceedings, or otherwise.

 

11.           In the event any payment
made by Obligor to Bank with respect to the Obligations is held to constitute a
preference under the U.S. Bankruptcy Code, or if for any other reason Bank is
required to refund such payment or pay the amount thereof to any other party,
such a payment shall not constitute a release of Guarantor from any liability
hereunder, but Guarantor agrees to pay such amount to Bank upon demand.

 

12.           In the event any or all of
the Guarantors are corporations, each such Guarantor warrants and represents
that it has authority to execute and deliver this Guaranty and agrees that it
will do all things necessary to preserve and keep in full force and effect its
existence, franchises, rights and privileges as a business or stock corporation
under the laws of the state of its incorporation.

 

13.           To the extent permitted by
law, Guarantor expressly waives and relinquishes all rights and remedies of
suretyship, including, but not limited to, all rights and remedies provided
under sections 2787 through 2856 of the Civil Code of the State of California.

 

14.           This Guaranty is for the
benefit of Bank, its successors and assigns, and in the event of an assignment
by the Bank, its successors or assigns, of the Obligations, or any part
thereof, the rights and benefits hereunder shall be transferred with such
Obligations without further act on the part of Bank and without notice to
Guarantor.

 

15.           Suit may be brought against
the Guarantor or against any other guarantor without impairing the rights of
Bank, its successors or assigns, against any guarantor, and the Bank may
compromise or settle with any guarantor for such sum or sums as it may see fit
and release such guarantor from all further liability to Bank for the
Obligations without impairing the right of the Bank to demand and collect the
balance of the Obligations from other guarantors not so released; but it is
agreed, however, that such compromise, settlement and release shall in no way
impair the rights of the guarantors as among themselves.

 

16.           In the event of the death of
any Guarantor hereunder, the obligation of the deceased shall continue in full
force and effect against his or her estate or beneficiaries as to all
Obligations which shall have been created or incurred by the Obligor prior to
the time when the Bank shall have received notice, in writing, of such death;
and this Guaranty shall from the date of such death as to all Obligations
created, incurred or

 

3

 

arising
after such death remain and continue in full force as a Guaranty by the
surviving guarantors.

 

17.           Guarantor, individually and
severally, expressly agrees that this contract is performable in the Los
Angeles County, California.

 

18.           The invalidity or
unenforceability in any particular circumstances of any provision of this
Guaranty shall not extend beyond such provision or such circumstances, and no
other provision of this instrument shall be affected thereby.

 

19.           Guarantor acknowledges and
agrees that Guarantor has received and reviewed a copy of the Agreement and all
other documents executed in connection with the Agreement.

 

20.           Any notice or demand
required hereunder shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, certified mail, return receipt requested,
addressed to Guarantor or Bank, as the case may be, at the address set out in
the Agreement for the Bank and as set forth below for Guarantor or at such
other address as such party may hereafter deliver in accordance herewith.  Any other method of delivery or demand shall
be effective only when actually received by the recipient thereof. If and when
included within the term “Guarantor” or “Bank” there are more than one person,
all shall jointly arrange among themselves for their joint execution and
delivery of a notice to the other specifying some person at some specific
address for the receipt of all notices, demands, payments or other
documents.  All persons included within
the terms “Guarantor” or “Bank”, respectively, shall be bound by notices,
demands, payments and documents given in accordance with the provisions of this
Paragraph to the same extent as if each had received such notice, demand,
payment or document.

 

21.           To the extent permitted by
law, Guarantor further hereby waives and agrees not to assert or take advantage
of:

 

a.             Any right to require Bank to
proceed against Obligor or (if Obligor is a limited liability company) any
members of Obligor or any other indemnitor or guarantor of the indebtedness and
obligations guaranteed hereby or any other person or to proceed against or
exhaust any security held by Bank at any time or to pursue any other remedy in
Bank’s power or under any other agreement before proceeding against any
Guarantor hereunder;

 

b.             (i) any defense based
upon an election of remedies by Bank, even though such election destroys or
otherwise impairs the subrogation rights of Guarantor or the right of Guarantor
(after payment of the obligations guaranteed by Guarantor under this Guaranty)
to proceed against Obligor for reimbursement, or both, and (ii) any and
all rights or defenses Guarantor may have by reason of protection afforded to
Obligor with respect to any of the obligations of Guarantor under this Guaranty
pursuant to the antideficiency or other laws of the State of California
limiting or discharging Obligor’s indebtedness;

 

4

 

c.             Any right or claim or right
to cause a marshaling of the assets of Guarantor;

 

d.             Any duty on the part of Bank
to disclose to Guarantor any facts Bank may now or hereafter know about
Obligor, regardless of whether Bank has reason to believe that any such facts
materially increase the risk beyond that which Guarantor intended to assume or
has reason to believe that such facts are unknown to Guarantor or has a
reasonable opportunity to communicate such facts to Guarantor, it being
understood and agreed that Guarantor is fully responsible for being and keeping
informed of the financial condition of Obligor and of any and all circumstances
bearing on the risk that liability may be incurred by Guarantor

 

e.             Any lack of notice of
disposition or of manner of disposition of any collateral;

 

f.              Any invalidity, irregularity
or unenforceability, in whole or in part, of any one or more of the Transaction
Documents;

 

g.             Any deficiencies in the
collateral or any deficiency in the ability of Bank to collect or to obtain
performance from any persons or entities now or hereafter liable for the
payment and performance of any obligation hereby guaranteed;

 

h.             Any assertion or claim that
the automatic stay provided by 11 U.S.C. §362 (arising upon the voluntary or
involuntary bankruptcy proceeding of Obligor) or any other stay provided under
any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which
may be or become applicable, shall operate or be interpreted to stay,
interdict, condition, reduce or inhibit the ability of Bank to enforce any of
its rights, whether now or hereafter required, which Bank may have against
Guarantor or the collateral;

 

i.              Any modifications of the
Transaction Documents or any obligation of Obligor by operation of law or by
action of any court, whether pursuant to the Bankruptcy Reform Act of 1978, as
amended, or any other debtor relief law (whether statutory, common law, case
law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
or otherwise;

 

j.              Any action, occurrence,
event or matter consented to by Guarantor under Section 20(d) hereof,
under any other provision hereof, or otherwise;

 

k.             Any and all benefits and
defenses under California Civil Code Section 2810;

 

l.              Any and all benefits and
defenses under California Civil Code Section 2809;

 

5

 

m.            All principles or provisions
of law, statutory or otherwise, which are or might be in conflict with the
terms of this Guaranty.  By doing so,
Guarantor agrees that Guarantor’s obligations shall not be affected by any
circumstances, whether or not referred to in this Guaranty, which might
otherwise constitute a legal or equitable discharge of a surety or guarantor;
and

 

o.             Any right of discharge under
any and all statutes or other laws relating to guarantors or sureties and any
other rights of sureties and guarantors thereunder.

 

Guarantor understands that the exercise by Bank of certain rights and
remedies contained in the Transaction Documents may affect or eliminate
Guarantor’s right of subrogation against Obligor and that Guarantor may
therefore incur a partially or totally nonreimbursable liability under this
Guaranty.  Nevertheless, Guarantor hereby
authorizes and empowers Bank to exercise, in its sole and absolute discretion,
any right or remedy, or any combination thereof, which may then be available,
since it is the intent and purpose of Guarantor that the obligations under this
Guaranty shall be absolute, independent and unconditional under any and all
circumstances.

 

In accordance with Section 2856 of the California Civil Code,
Guarantor also waives any right or defense based upon an election of remedies
by Bank , even though such election destroys or otherwise impairs the
subrogation rights of Guarantor or the rights of Guarantor (after payment of
the obligations guaranteed by Guarantor under this Guaranty) to proceed against
Obligor for reimbursement, or both.

 

In accordance with Section 2856 of the California Civil Code,
Guarantor waives any and all other rights and defenses available to Guarantor
by reason of Sections 2787 through 2856, inclusive, of the California
Civil Code, including any and all rights or defenses Guarantor may have by
reason of protection afforded to Obligor with respect to any of the obligations
of Guarantor under this Guaranty pursuant to the antideficiency or other laws
of the State of California limiting or discharging Obligor’s indebtedness.  Likewise, Guarantor waives any and all rights
and defenses available to Guarantor under California Civil Code
Sections 2899 and 3433

 

Guarantor shall have no right of, and hereby waives any claim for,
subrogation, reimbursement, indemnification, and contribution against Obligor
and against any general partner, member or other constituent of Obligor, and
against any other person or any collateral or security for the indebtedness
(including without limitation any such rights pursuant to Sections 2847
and 2848 of the California Civil Code), until the indebtedness has been
indefeasibly paid and satisfied in full and all outstanding obligations owed to
Bank under the Transaction Documents have been fully performed.

 

EXECUTED
effective as of the 24th day of June, 2010.

 

6

 

INTEGRATED
REAL ESTATE SERVICE CORP.

 

	
  By:

  	
  /s/
  William Ashmore

  	
   

  
	
  Name:

  	
  William
  Ashmore

  	
   

  
	
  Title:

  	
  President

  	
   

  
					

 

 

GUARANTOR
ADDRESS FOR NOTICE

 

Integrated
Real Estate Service Corp.

19500 Jamboree Road

Irvine, CA  92612

Attention:  Ron Morrison, Executive Vice
President and General Counsel

Telephone:  949-475-3942

Facsimile:  949-706-6208

Email:  ron.morrison@impaccompanies.com

 

7

 

ACKNOWLEDGMENT

 

State
of California

 

County
of Orange

 

On                                     ,
before me,                                                                ,
personally appeared
                                           ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the
instrument.

 

I
certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.

 

WITNESS
my hand and official seal.

 

	
   

  	
   

  	
  [SEAL]

  
	
  [Signature
  of Notary]

  	
   

  

 

8

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