Document:

Delivered Demand Reduction Agreement

 Exhibit 10.38 
 Confidential Treatment 
 Requested 
  

 DELIVERED DEMAND REDUCTION
AGREEMENT 
 BETWEEN 
 NEVADA POWER COMPANY 
 AND 
 COMVERGE, INC. 
 DATED 
 MAY 2, 2007 
  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page
	 RECITALS
	  	1
	 ARTICLE 1 - DEFINITIONS
	  	1
	 1.1
	  	Defined Terms	  	1
	 1.2
	  	Interpretation	  	10
	 ARTICLE 2 - TERM AND TERMINATION
	  	11
	 2.1
	  	Term and Termination	  	11
	 2.2
	  	Continuance in Effect	  	11
	 ARTICLE 3 - PROJECT DESCRIPTION
	  	11
	 3.1
	  	Implementation of the DLCS	  	11
	 3.2
	  	Operation and Maintenance of EDLCS	  	11
	 ARTICLE 4 - DELIVERED DEMAND REDUCTION AND DISPATCH
	  	11
	 4.1
	  	Delivered Demand Reduction	  	11
	 4.2
	  	Demand Reduction Shortfall	  	12
	 4.3
	  	Maximum Delivered Demand Reduction	  	12
	 4.4
	  	Minimum Performance Criteria	  	13
	 ARTICLE 5 - PAYMENT CALCULATIONS; TRANSFER OF DLCS
	  	13
	 5.1
	  	Security	  	13
	 5.2
	  	Netting of Payments	  	14
	 5.3
	  	Transfer of DLCS Upon Expiration or Termination	  	14
	 ARTICLE 6 - MARKETING, RECRUITMENT AND RETENTION
	  	14
	 6.1
	  	Marketing Plan	  	14
	 6.2
	  	Marketing Materials	  	15
	ARTICLE 7 - EQUIPMENT INSTALLATION	  	15
	 7.1
	  	Installation	  	15
	 ARTICLE 8 - MAINTENANCE; SITE CLEAN UP
	  	15
	 8.1
	  	Scope of Work	  	15
	 8.2
	  	Tracking, Verification and Resolution of Participant Complaints	  	15
	 8.3
	  	Preventive, Routine and Non-Routine Maintenance and Repairs	  	15
	 8.4
	  	EDLCS Inspection Program	  	16
	 8.5
	  	Comverge Monitoring and Testing	  	16
	 8.6
	  	Program Reporting	  	16
	 8.7
	  	Site Clean Up	  	16
	 ARTICLE 9 - MEASUREMENT AND VERIFICATION PROGRAM
	  	16
	 9.1
	  	NPC Responsibility	  	16
	 9.2
	  	Independent Verification	  	16
	 ARTICLE 10 - SOFTWARE SYSTEM
	  	16
	 10.1
	  	DLCS Software System	  	16
	 10.2
	  	EDLCS Software System	  	17
	 10.3
	  	Grant of Software License	  	17
	 10.4
	  	BIS Software Data	  	17
	 ARTICLE 11 - BILLING AND PAYMENT
	  	17
	 11.1
	  	Invoicing	  	17
	 11.2
	  	Monthly Invoices and Annual Statement	  	17
	 11.3
	  	Payment Responsibility	  	18
	 11.4
	  	Late Payments	  	18
	 11.5
	  	Billing Disputes	  	18
	 ARTICLE 12 - DEFAULT; TERMINATION
	  	18
	 12.1
	  	Events of Default of Comverge	  	18

  

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	 12.2
	  	Events of Default of NPC	  	19
	 12.3
	  	Termination for Events of Default	  	20
	 12.4
	  	Special Bankruptcy Provision	  	20
	 ARTICLE 13 - CONTRACT ADMINISTRATION AND NOTICES
	  	21
	 13.1
	  	Notices in Writing	  	21
	 13.2
	  	Changes	  	21
	 13.3
	  	Authority of Representatives	  	21
	 13.4
	  	Operating Records	  	21
	 13.5
	  	Audit Rights	  	21
	 13.6
	  	Program Management Procedures	  	21
	 13.7
	  	Dispute Resolution	  	21
	 ARTICLE 14 - FORCE MAJEURE
	  	22
	 14.1
	  	Definition of Force Majeure	  	22
	 14.2
	  	Applicability of Force Majeure	  	22
	 14.3
	  	Termination Due to Extended Force Majeure	  	23
	 14.4
	  	Effect of Force Majeure on Payments	  	23
	 ARTICLE 15 - REPRESENTATIONS AND WARRANTIES
	  	23
	 15.1
	  	Comverge’s Representations and Warranties	  	23
	 15.2
	  	NPC’s Representations and Warranties	  	25
	 ARTICLE 16 - INSURANCE
	  	26
	 16.1
	  	Comverge’s Insurance Requirements	  	26
	 16.2
	  	Changes to Insurance Minimum Limits	  	26
	 16.3
	  	Notice to NPC	  	26
	 16.4
	  	Certificates of Insurance Required	  	26
	 16.5
	  	Application of Proceeds	  	26
	 ARTICLE 17 - INDEMNITY
	  	26
	 17.1
	  	GENERAL	  	26
	 17.2
	  	Environmental	  	27
	 17.3
	  	Intellectual Property/ EDLCS	  	27
	 17.4
	  	Procedures	  	27
	 17.5
	  	Survival	  	29
	 ARTICLE 18 - LIMITATION OF LIABILITY
	  	29
	 18.1
	  	LIMITATION OF LIABILITY	  	29
	 ARTICLE 19 - COMPLIANCE WITH LAW AND REGULATORY REQUIREMENTS
	  	29
	 19.1
	  	Compliance with the Law	  	29
	 ARTICLE 20 - ASSIGNMENT AND OTHER TRANSFER RESTRICTIONS
	  	29
	 20.1
	  	No Assignment Without Consent	  	29
	 ARTICLE 21 - JOINT INTEREST
	  	30
	 21.1
	  	Cooperation by Parties	  	30
	 21.2
	  	Comverge Cooperation	  	30
	 ARTICLE 22 - MISCELLANEOUS
	  	30
	 22.1
	  	Waiver	  	30
	 22.2
	  	Taxes/ Permits	  	31
	 22.3
	  	Disclaimer of Third Party Beneficiary Rights	  	31
	 22.4
	  	Relationship of the Parties	  	31
	 22.5
	  	 ***
	  	31
	 22.6
	  	Press Releases	  	31
	 22.7
	  	Confidentiality	  	32
	 22.8
	  	Diverse Supplier Information	  	32
	 22.9
	  	Integrity	  	32
	 22.10
	  	Survival of Obligations	  	32
	 22.11
	  	Severability	  	32
	 22.12
	  	Complete Agreement; Amendments	  	32
	 22.13
	  	Binding Effect	  	32

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment.
Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

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	 22.14
	  	Headings	  	32
	 22.15
	  	Counterparts	  	32
	 22.16
	  	Governing Law	  	32

  

					
	 ATTACHMENT 1 - TARGET DELIVERED DEMAND REDUCTION; COMPENSATION; MEASUREMENT & VERIFICATION
	  	
			
	Attachment 1A:	  	TARGET DELIVERED DEMAND REDUCTION	  	1A
	Attachment 1B:	  	PAYMENT CALCULATIONS	  	1B
	Attachment 1C:	  	MEASUREMENT AND VERIFICATION PROGRAM	  	1C
		
	 ATTACHMENT 2 - STATEMENT OF WORK
	  	
			
	Attachment 2A:	  	MARKETING, RECRUITMENT AND RETENTION	  	2A
	Attachment 2B:	  	LOAD CONTROL EQUIPMENT, LOAD CONTROL SERVICES, INSTALLATION AND MAINTENANCE SCOPE OF WORK	  	2B
	Attachment 2C:	  	EXISTING DEMAND RESPONSE SYSTEM OPERATION	  	2C
	Attachment 2D:	  	NOTICES	  	2D
	Attachment 2E:	  	INSURANCE	  	2E
	Attachment 2F:	  	SOFTWARE	  	2F
	Attachment 2G:	  	REPORTING	  	2G
		
	ATTACHMENT 3 - ELECTRONIC DATA EXCHANGE FORMAT	  	3A

  

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 DELIVERED DEMAND REDUCTION AGREEMENT 
 This DELIVERED DEMAND REDUCTION AGREEMENT (“Agreement”), dated as of April __, 2007, is entered into by and between Nevada Power Company, a
Nevada corporation, with principal offices at 6226 West Sahara Ave., Las Vegas, Nevada 89151 (“NPC”) and Comverge, Inc., a Delaware corporation, located at 120 Eagle Rock Avenue, Suite 190, East Hanover, NJ 07936 (“Comverge”).
NPC and Comverge are sometimes hereinafter referred to as the “Parties” or individually as a “Party.” 
 RECITALS 

 WHEREAS, Comverge desires to design, develop, build, and operate a Direct Load Control System (as hereinafter defined) in
NPC’s service territory, and to aggregate the individual customer load which is controlled by the Direct Load Control System to provide NPC with a demand reduction due to the operation of the Direct Load Control System in each Program Year (as
hereinafter defined) equal to at least the Target Delivered Demand Reduction (as hereinafter defined) for such Program Year; 
 WHEREAS, NPC and Comverge desire for Comverge to maintain and operate NPC’s Existing Direct Load Control System (as hereinafter defined), which has an estimated Delivered Demand Reduction of ***; 
 WHEREAS, NPC currently owns the Existing Direct Load Control System and shall have the right, upon the expiration or termination of this
Agreement, to purchase the Load Control Equipment (as hereinafter defined) constituting a portion of the Direct Load Control System from Comverge; and 
 WHEREAS, NPC and Comverge desire to enter into this Agreement under the terms of which, among other things, Comverge shall design, develop, build and operate the Direct Load Control System and maintain and
operate the Existing Direct Load Control System and NPC shall pay Comverge for the Delivered Demand Reduction (as hereinafter defined) pursuant to the operation of the DLCS and the EDLCS. 
 NOW, THEREFORE, in consideration of the premises and the covenants and conditions contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: 
 ARTICLE 1 - DEFINITIONS 
 1.1 Defined Terms. Unless otherwise defined herein or in any Exhibit, Schedule or Attachment hereto, the following terms, when used in this Agreement (including
the Recitals and any Exhibit, Schedule or Attachment hereto) shall have the meanings set forth below. The capitalized terms listed in this Article shall have the meanings set forth herein whenever the 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has
been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 - 1 - 

 
terms appear in this Agreement, whether in the singular or the plural or in the present or past tense. 
 “Adjusted Baseline Device Demand” has the meaning set forth in Attachment 1C. 
 “Adjusted kW of the End-use Load” or “Adjusted kW” has the meaning set forth in Attachment 1C. 
 “Affiliate” means an entity that controls, is controlled by, or is under common control with another entity. 
 “Agreement”
means this Delivered Demand Reduction Agreement and the Attachments, Exhibits, Schedules and Appendices hereto, all of which are hereby incorporated herein by reference, as each such document may be amended from time to time. 
 “Annual Settlement” means the process of issuing an Annual Settlement Statement. 
 “Annual Settlement Statement” refers to the statement issued by Comverge to NPC following the end of each Control Season or the expiration or termination of this Agreement, in accordance with Attachment 1B,
indicating the amount of the DLCS Settlement Payment and the EDLCS Settlement Payment. 
 “Applicable Law” means any federal, state, local or other
law (including any Environmental Laws), common law, treaty, code, rule, ordinance, binding directive, regulation, order, judgment, decree, ruling, determination, permit, certificate, authorization, or approval of a Governmental Authority, which is
binding on a Party or its property or operations. 
 “Available Devices” has the meaning set forth in Attachment 1C. 
 “Average Device Demand” has the meaning set forth in Attachment 1C. 
 “Average Device Demand Reduction” has the meaning set forth in Attachment 1C. 
 “Average Percentage of Non-Responding Devices”
or “AVG%NRD” has the meaning set forth in Attachment 1C. 
 “Baseline Device Demand” has the meaning set forth in Attachment 1C.

 “BIS Software” means the Business Information Systems that tracks installation, marketing, customer interaction, and inventory. 
 “Business Day” means Monday through Friday of each week, except for Holidays. 
 “Carrier Equipment” means, pursuant to Attachment 2B, all Carrier hardware, including, without limitation, Two-way PCTs and other related equipment, and all software required to provide Delivered Demand
Reduction. 
  

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 “Commercial Operation” means the period during the Term of this Agreement that a Facility is a Participating
Facility operating pursuant to the terms of this Agreement. 
 “Commercial Participating Facility” means a Participating Facility that is on one of
the following NPC rate schedules: GS; OGS-TOU; LGS-1; or OLGS-1-TOU. 
 “Communications Sampled Devices” has the meaning set forth in Attachment
1C. 
 “Control Season” means June 1 through September 30 of each Program Year. 
 “Control Season Day” means the period beginning at *** and ending on *** Pacific Prevailing Time of any Business Day during the Control Season. 
 “Control Season Month” means any calendar month within a Control Season. 
 “Cycling” refers to a load control strategy that interrupts and then restores electrical service to an End-use Load where electrical service is interrupted for a specified percentage of either its most-likely run-time as
determined by recent historical run-time or clock time of each half-hour of a Dispatch Hour. 
 “Deemed Demand Reduction” or “DDR” refers
to the aggregated electrical system load reduction due to Dispatch *** pursuant to Attachment 1B. 
 “Deliverable” is any document or work product
required to be delivered or submitted under this Agreement by either Party. 
 “Delivered Demand Reduction” refers to the aggregated electrical
system load reduction due to Dispatch and is based upon Deemed Demand Reduction for Monthly Payments and Verified Demand Reduction for Annual Settlement Statements. 
 “Demand Reduction Shortfall Payment” has the meaning set forth in Section 4.2. 
 “Device
Populations” has the meaning set forth in Attachment 1C. 
 “Direct Load Control System” or “DLCS” means all equipment and
components necessary for operating the Program and providing Delivered Demand Reduction in accordance with this Agreement, including, without limitation, Load Control Equipment, proprietary software and Third Party Services. 
 “Dispatch” means operating the DLCS and/or the EDLCS in such a manner that Participating Facilities’ End-use Loads are curtailed in order to reduce the
aggregate demand on the NPC system. 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment.
Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 - 3 - 

 “Dispatch Hours” refers to the hours during which the DLCS and/or the EDLCS is activated through Dispatch.

 “Dispatch Event” refers to any set of contiguous Dispatch Hours. 
 “DLCS Monthly Payment” has the meaning set forth in Attachment 1B. 
 “DLCS Settlement Payment” has the
meaning set forth in Attachment 1B. 
 “EDLCS Monthly Payment” has the meaning set forth in Attachment 1B. 
 “EDLCS Settlement Payment” has the meaning set forth in Attachment 1B. 
 “End-use Load” means a central air conditioning compressor or a central air-conditioning compressor and concurrently operating fan motor(s) that supply less than or equal to *** or less of cooling or other controllable load if
approved by NPC of less than ***, located at a Participating Facility and controlled by a Load Control Device. 
 “Environmental Contamination”
means (a) hazardous wastes, hazardous substances, hazardous materials, hazardous pollutants, toxic substances, toxic pollutants, contaminants, pollutants or words of similar import, as those terms are used in any Environmental Laws and
(b) the presence of any other chemical or other material or substance at such levels or quantities or location, or of such form or character, to be of regulatory concern under such Environmental Laws. 
 “Environmental Laws” means the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Hazardous
Materials Transportation Act, the Toxic Substances Control Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Oil Pollution and Hazardous Substances Control Act, and all other applicable federal, state and local
environmental laws and regulations, as amended or superseded. 
 “Existing Direct Load Control System” or “EDLCS” means NPC’s
current load control system and Program as described in Attachment 2C. 
 “Facility” means a residential NPC metered customer site or an
NPC-metered customer site for a commercial customer with a unique tax identification number. 
 “Failed Devices” has the meaning set forth in
Attachment 1C. 
 “Failed Dispatch Event Payment” has the meaning set forth in Section 4.5. 
 “Force Majeure” has the meaning set forth in Section 14.1. 
 “Good Industry Practice” means the practices, methods and acts (including, but not limited to, the practices, methods and acts engaged in or approved by a significant portion of the electric utility industry) that, at a particular
time, in the exercise of reasonable judgment in light of the 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for
confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 - 4 - 

 
facts known or that should reasonably have been known at the time a decision was made, would have been expected to accomplish the desired result in a manner
consistent with law, regulation, codes, standards, equipment manufacturers’ recommendations, reliability, safety, environmental protection, economy and expedition. With respect to each Participating Facility, Good Industry Practice(s) includes
the Parties or the Parties contractors, where applicable, taking reasonable steps to ensure that: 
  

	 	(1)	Equipment, materials, resources and supplies, including spare parts inventories, are supplied or made available by Comverge to meet the Participating Facilities’ needs;

  

	 	(2)	Comverge has sufficient operating personnel available at all times and who are adequately experienced and trained and licensed as necessary to operate the DLCS and the EDLCS
properly, efficiently, and in coordination with NPC and are capable of responding to reasonably foreseeable emergency conditions; 

  

	 	(3)	Preventive, routine and non-routine maintenance and repairs are performed on a basis that ensures reliable long term and safe operation, and are performed by knowledgeable, trained
and experienced personnel utilizing proper equipment and tools; 

  

	 	(4)	Appropriate monitoring and testing are performed to ensure equipment is functioning as designed; 

  

	 	(5)	Equipment is not operated in a reckless manner, in violation of manufacturers’ guidelines or in a manner unsafe to workers, the general public, or NPC’s transmission or
distribution grid or contrary to Applicable Laws or without regard to defined limitations; and 

  

	 	(6)	The equipment will function properly under normal conditions at the Participating Facilities. 

 “Governmental Authority” means any federal, state, local, or other governmental, regulatory or administrative agency, court, commission, department, board, or other governmental subdivision, legislature,
rulemaking board, tribunal, or other governmental authority having jurisdiction over a Party or its property or operations. 
 “Holiday” means all
North American Electric Reliability Council holidays and any holidays specified by NPC. 
 “Hourly Demand” means the electrical demand in kW of
each End-use Load in one hour using Hourly Runtime data and Measured kW data. The methodology for calculating and determining Hourly Demand is set forth in Attachment 1C. 
 “Hourly Population Demand” means the aggregated electrical demand. 
  

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 “Hourly Runtime” means the number of minutes of End-use Load operation within a particular hour. 
 “Incremental Deemed Demand Reduction” or “Inc. DDR” has the meaning set forth in Attachment 1B. 
 “Incremental Price” or “Inc. Price” has the meaning set forth in Attachment 1B. 
 “Inspected Devices” has the meaning set forth in Attachment 1C. 
 “kW Factor” has the meaning set forth
in Attachment 1C. 
 “Late Payment Rate” means ***. 
 “LMS Software” means Comverge proprietary software that controls Comverge Load Control Devices. 
 “Load Control Device” or
“Device” means a unique device installed at a Participating Facility which, upon Dispatch, enables curtailment of a single End-use Load through either Cycling or Setback. Load Control Devices include, without limitation, PCTs and Switches.
In the event that a Switch or PCT contains more than one relay, and each relay separately controls an End-use Load, then each relay is considered a Load Control Device. 
 “Load Control Device Population” or “Device Population” means a distinct population of similar Load Control Devices, as defined in Attachment 1C. 
 “Load Control Equipment” means all equipment required to develop and operate the DLCS and the EDLCS, including, without limitation, (a) Load Control
Devices, (b) LMS Software, and (c) all additional necessary hardware, servers, and communication equipment required for Dispatch exclusive of Third Party Services. 
 “M&V Contractor” has the meaning set forth in Attachment 1C. 
 “M&V Program” has the meaning set
forth in Attachment 1C. 
 “M&V Sample” has the meaning set forth in Attachment 1C. 
 “M&V Software” means the Comverge Hosted Software that collects A/C use data from Two- way Devices for the purposes of enabling the calculation of the kW
Factor related to Comverge devices. 
 “Maintained Deemed Demand Reduction” or “Maint. DDR” has the meaning set forth in Attachment 1B.

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential
treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

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 “Maintained Price” or “Maint. Price” has the meaning set forth in Attachment 1B. 
 “Marketing Plan” has the meaning set forth in Attachment 2A. 
 “Measured kW of the End-use Load” or “Measured kW” means for DLCS End-use Loads the electrical demand in kW of an End-use Load as measured by Comverge at the time of installation of the Load Control Device using a true
rms kW meter certified by the National Institute of Standards and Technology to be accurate to within ± 1.5%; and, for EDLCS End-use Loads the electrical demand in kW of an End-use Load as previously determined by the installing technician
and the M&V Contractor by correcting kVA measurements for power factor. 
 “Measurement and Verification Event” or “M&V Event”
means a Dispatch Event of at least *** that occurs between *** and *** Pacific Prevailing Time where the ambient Las Vegas temperature as measured at the UNLV Mechanical Engineering Building weather station is *** and in which PCTs are controlled
using a *** and Switches and Smart Switches are controlled using the *** as allowed by approved PUCN tariffs. *** 
 “Minimum Delivered Demand
Reduction”, for a Program Year, means an amount equal to *** of the Target Delivered Demand Reduction for such Program Year. 
 “Minimum
Performance Criteria” has the meaning set forth in Section 4.3. 
 “Minimum Sample Size” or “MSS” has the meaning set forth in
Attachment 1C. 
 “Mobilization Payment” has the meaning set forth in Attachment 1B. 
 “Monthly Payments” means the DLCS Monthly Payment and the EDLCS Monthly Payment. 
 “Moody’s” means
Moody’s Investor Services, Inc. and any successor entity thereto. 
 “NDA” means the Non-Disclosure Agreement entered into by the Parties on
February 8, 2007, as may be modified or amended from time to time. 
 “Offset Factor” has the meaning set forth in Attachment 1C. 

“One-way” or “1-way” is an adjective used to modify Device, PCT, or Switch, and means a
Load Control Device which only receives communication signals and data. One-way Devices include, without limitation, the Comverge SuperStatTM,
Cannon/Honeywell (T7512) ExpressStat, Cannon LCR-5000, and Cannon LCR-5200. 
 “Override” means Participant cancellation of the control of
their End-use Load during Dispatch. 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment.
Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

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 “Participant” means the NPC residential or commercial customer that owns or rents a Participating Facility and
has chosen to participate in the Program. 
 “Participating Facility” means a Facility that is participating in the Program. Participating
Facilities include Facilities on a load management rider or rate schedule and one of the following NPC rate schedules: RS; RM; TRS-TOU; GS; OGS-TOU; LGS-1; or OLGS-1-TOU. For any Facility on LGS-1 or OLGS-1-TOU, maximum kW demand must be 15 kW or
less. Facilities on LGS-1 or OLGS-1-TOU with maximum kW demand above 15 kW, and Facilities on all other rate classes are excluded. 
 “PCT” means a
programmable communicating thermostat that is a Load Control Device that can implement either Cycling or Set-back load control strategies and is accessible for temperature set-point programming by Participants over the internet. 
 “Performance Security” has the meaning set forth in Section 5.1.1. 
 “Percentage of Non-Responding Devices” or “%NRG” has the meaning set forth in Attachment 1C. 
 “Percentage of Participant
Override” or “PPO” has the meaning set forth in Attachment 1C. 
 “Program” refers to the NPC residential and small commercial
customer offering that provides incentives to those NPC eligible customers that voluntarily sign up for the applicable load management rider or tariff and allow their End-use Loads to be curtailed by NPC via Load Control Devices and the DLCS or the
EDLCS. 
 “Program Month” means the period beginning on the first calendar day of the month and ending on the last calendar day of the month for
any month falling within a Program Year. 
 “Program Year” or “PY” means the period
beginning on (a) the Start Date and ending on December 31, 2007 for Program Year 1 and (b) January 1st and ending on
December 31st for each subsequent Program Year. 
 “Prospect” means any NPC residential or commercial customer who is eligible for the Program. 
 “Proxy kW Factor” means the
assumed kW Factors that are used for the DLCS Monthly Payments and are updated at the end of each Control Season to match the most recent kW Factors as determined by M&V. 
 “Proxy Percentage of Non-Responding Devices” or “Proxy %NRD” is a proxy for the Percentage of Non-Responding Devices as set forth in Attachment 1B. 
 “PUCN” means the Public Utilities Commission of Nevada or any successor regulatory agency thereto. 
  

 - 8 - 

 “Qualified Financial Institution” means a financial institution having an office in the United States, with
total assets of at least Ten Billion Dollars ($10,000,000,000) and whose long-term, senior, unsecured, non-credit-enhanced credit rating is at least “A” by S&P and “A2” by Moody’s. 
 “Residential Participating Facility” means a Participating Facility that is on one of the following NPC rate schedules: RS; RM; and, TRS-TOU. 
 “S&P” means Standard and Poor’s Ratings Group, a division of McGraw Hill, Inc. and any successor entity thereto. 
 “Set-back” means a load control strategy that raises the temperature set-point of a PCT for a specified number of degrees over a specified time. 
 “Settlement Payment” means the sum of the DLCS Settlement Payment and the EDLCS Settlement Payment. If the Settlement Payment is a negative number, then
Comverge shall make payment of such Settlement Payment to NPC. If the Settlement Payment is a positive number, then NPC shall make payment of such Settlement Payment to Comverge. 
 “Similar Devices” means Load Control Devices that operate on the same communications network and control End-use Loads in the same fashion. 
 “Similar Device Groups” means groups of Similar Devices as specified in Attachment 1C. 
 “Smart” is an
adjective used to modify Switch and indicates a Switch that is enabled with technology that determines the most-likely run-time of an End-use Load based upon algorithms that use recent historical run-time. Proprietary commercial versions of such
algorithms include without limitation Cannon Technologies’ TrueCycle, and Comverge’s Adaptive Algorithm. 
 “Software” has the meaning
set forth in Attachment 2F. 
 “Software Documentation” has the meaning set forth in Attachment 2F. 
 “Start Date” means the date of this Agreement. 
 “System
Availability” means, with respect to the DLCS or the EDLCS, as applicable, a ratio, calculated by dividing (a) the total number of hours during the period starting on *** and ending on *** as determined pursuant to a process to be
implemented by the Parties and verified by the M&V Contractor ***. 
 “System Dispatch Operator” or “SDO” means NPC’s
representative(s) responsible for centralized Dispatch of the DLCS and the EDLCS and control of tie-line power flows. 
 *** Portions of this agreement
marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 - 9 - 

 
Authorized personnel with login access shall be considered authorized users within the definition of SDO. 
 “Switch” means a load control receiver that controls End-use Load(s) via a relay or relays and can implement Cycling strategies. 
 “Target Delivered Demand Reduction” means the Delivered Demand Reduction goals of the DLCS as specified in Attachment 1A. 
 “Term” means the period of time during which this Agreement shall remain in full force and effect as described in Article 2. 
 “Third Party Services” means all hardware, software and services necessary for execution of the Program and for operation of the DLCS and the EDLCS, which
hardware or software is not purchased or owned by either NPC or Comverge and which services are not performed by either NPC or Comverge. 
 “Two-way” or “2-way” is an adjective used to modify Device, PCT, or Switch, and means a Load
Control Device that both receives and sends communication signals and data. The device sends enough information back to determine the Hourly Demand of the End-use Load and the Percentage of Participant Override without additional monitoring and
communication equipment. Two-way Devices include, without limitation, the Carrier Comfort ChoiceTM PCT. 
 “Use” has the meaning set forth in Attachment 2F. 
 “Verified
Demand Reduction” or “VDR” refers to the aggregated electrical system load reduction due to Dispatch based upon measured values determined by the M&V Contractor as calculated pursuant to Attachment 1C. 
 “WECC” means the Western Electric Coordinating Council (formerly Western System Coordinating Council) and any successor entity thereto. 
 1.2 Interpretation. In this Agreement, unless otherwise stated, 
 1.2.1 Any references to: 
 (a) any Section, Schedule, Attachment, Exhibit or other provision thereof, shall
be construed, at any particular time, as including a reference to the Section, Schedule, Attachment, Exhibit or the relevant provision thereof as it may have been amended, modified or supplemented; 
 (b) any agreement (including this Agreement or any Schedule, Attachment or Exhibit hereto) shall be construed, at any particular time, as including a
reference to the relevant agreement as it may have been amended, modified or supplemented; 
 (c) a Party to this Agreement includes, in the
case of any Party, that Party’s 

  

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successors and permitted assigns and any entity succeeding to its functions and capacities; 
 (d) a month shall be construed as a reference to a calendar month unless otherwise stated; and 
 (e) a particular Section, Schedule, Exhibit or Attachment shall be a reference to the relevant Section, Schedule, Exhibit or Attachment in or to this
Agreement. 
 1.2.2 Words in the singular may be interpreted as referring to the plural and vice versa, and words denoting natural persons
may be interpreted as referring to corporations and any other legal entities and vice versa. 
 1.2.3 Whenever this Agreement refers to a
number of days, such number shall refer to the number of calendar days unless Business Days are specified. A requirement that a payment or Deliverable be made on a day that is not a Business Day shall be construed as a requirement that the payment
or Deliverable be made on the next following Business Day. 
 1.2.4 The words “include” and “including” are to be
construed as being at all times followed by the words “without limitation”, unless the context otherwise requires. 
 1.2.5 Words
not otherwise defined herein that have well-known and generally acceptable technical or trade meanings are used herein in accordance with such well-recognized meanings. 
 ARTICLE 2 - TERM AND TERMINATION 
 2.1 Term and Termination. This Agreement shall be effective upon the Start
Date and shall remain in full force and effect until the end of Program Year 3, unless terminated earlier pursuant to Sections 12.3 or 14.3. 
 2.2
Continuance in Effect. Pursuant to Section 22.8, applicable provisions of this Agreement shall continue in effect after termination thereof to the extent necessary to satisfy the terms and conditions of this Agreement and, as applicable,
final billings and adjustments related to any period prior to termination, repayment of any money due and owing either Party pursuant to this Agreement, and the indemnifications specified in this Agreement. 
 ARTICLE 3 - PROJECT DESCRIPTION 
 3.1 Implementation of the
DLCS. Comverge shall, in accordance with Good Industry Practice and Applicable Law, design, develop, build, operate and own a Direct Load Control System that shall, on demand, provide NPC with the ability to achieve Delivered Demand Reduction in
an amount at least equal to the Target Delivered Demand Reduction through Dispatch of the DLCS. Upon the expiration or termination of this Agreement, the ownership of the Direct Load Control System shall transfer to NPC in accordance with
Section 5.3. 
  

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 3.2 Operation and Maintenance of EDLCS. Comverge shall, in accordance with Good Industry Practice and Applicable
Law, maintain and operate the EDLCS in accordance with Attachment 2C. 
 ARTICLE 4 - DELIVERED DEMAND REDUCTION AND DISPATCH 
 4.1 Delivered Demand Reduction. Comverge shall assist NPC by preparing in a timely fashion the required documentation for having the Delivered Demand Reduction
classified as a non-spinning reserve in accordance with WECC requirements. Comverge shall provide escalation plans and implement trials, as may be required, in order to qualify the DLCS and the EDLCS for non-spinning reserve under WECC requirements.

 4.2 Demand Reduction Shortfall. In the event that the Verified Demand Reduction pursuant to Dispatch of the DLCS for any Program Year is less than
the Minimum Delivered Demand Reduction for such Program Year, Comverge shall pay NPC the “Demand Reduction Shortfall Payment,” which shall be calculated as follows: 
 *** 
 In the event that a Demand Reduction Shortfall Payment is owed for a Program Year, NPC shall calculate such Demand
Reduction Shortfall Payment and provide Comverge with an invoice therefore along with reasonable documentation of the calculation of the Demand Reduction Shortfall Payment amount. Comverge shall make payment of the Demand Reduction Shortfall Payment
within thirty (30) days of its receipt of an invoice from NPC. The provisions of this Section 4.2 are in addition to, and not in lieu of, (a) Annual Settlement or any other amount as a result of any Verified Demand Reduction shortfall
or (b) any of NPC’s rights or remedies under this Agreement, including under Article 12. The Parties agree that Comverge’s aggregate liability for all Demand Reduction Shortfall Payments hereunder shall not exceed ***. 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has
been requested has been filed separately with the Securities and Exchange Commission. *** 
  

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 4.3 Maximum Delivered Demand Reduction. 
  

	 	4.3.1	Program Year 1 and Program Year 2. During Program Year 1 and Program Year 2, Comverge may, in its discretion, install a quantity of Load Control Devices that causes the
Delivered Demand Reduction for such Program Year to exceed the Target Delivered Demand Reduction for such Program Year by up to ***; provided, however, notwithstanding anything herein to the contrary, the aggregate total of the Monthly Payments and
the Settlement Payment for such Program Year shall not exceed an amount equal to ***. In the event that the aggregate total of the Monthly Payments and the Settlement Payment for such Program Year would exceed the preceding limit, then (a) the
aggregate total of the Monthly Payments and the Settlement Payment for such Program Year shall be capped at an amount equal to the preceding limit, (b) the excess Deemed Demand Reduction that causes such limit to be exceeded shall not be
included in the current Program Year but shall be accounted for in the first Billing Month of the next Program Year and (c) such excess Deemed Demand Reduction shall be included in the invoice for the first Billing Month of the next Program
Year. 

  

	 	4.3.2	During Program Year 3, Comverge shall only install a quantity of Load Control Devices that will result in the Delivered Demand Reduction pursuant to Dispatch of the DLCS meeting but
not exceeding the Target Delivered Demand Reduction for Program Year 3. Notwithstanding anything herein to the contrary, under no circumstances shall the aggregate total of the Monthly Payments and the Settlement Payment for Program Year 3 exceed an
amount equal to (a) the sum Incremental Price (as of the end of Program Year 3) and the Maintained Price (as of the end of Program Year 3) multiplied by (b) the Target Delivered Demand Reduction for Program Year 3.

 4.4 Minimum Performance Criteria. 
  

	 	4.4.1	Comverge shall ensure that (a) each Participating Facility is capable of responding to NPC’s Dispatch signal within *** and (b) the DLCS and, after Program Year 1,
the EDLCS each maintain a System Availability of *** (collectively, the “Minimum Performance Criteria”). The Parties shall, within sixty (60) days of the Start Date, work together in good faith to determine the historical availability
of the EDLCS, excluding those hours where the EDLCS was not available ***. In the event that such historical availability of the EDLCS is determined by the Parties to be less than ***, the Parties shall mutually agree on an adjustment to the System
Availability threshold of *** for the EDLCS. 

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for
confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

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	 	4.4.2	In the event that the Minimum Performance Criteria are not satisfied at any point during a Program Year (for reasons other than Force Majeure), Comverge shall take all necessary
actions, *** in order to cause the satisfaction of the Minimum Performance Criteria. If Comverge fails to (x) initiate such necessary actions within *** after it becomes aware, or reasonably should have become aware, of such failure to satisfy
the Minimum Performance Criteria or (y) diligently pursue such actions thereafter until such time that the Minimum Performance Criteria are satisfied, then it shall be considered a Comverge Event of Default and NPC shall be entitled to withhold
payments hereunder to Comverge, until such Event of Default is cured by Comverge, in an amount equal to the reasonably estimated costs for NPC to cause the Minimum Performance Criteria to be satisfied. 

 4.5 Dispatch. NPC’s designated SDOs shall have the right to Dispatch, consistent with this Agreement, control of the Participating Facilities. NPC shall
provide to Comverge the names of all approved SDOs at least thirty (30) days before the start of each Control Season. *** 
 ARTICLE 5 - PAYMENT
CALCULATIONS; TRANSFER OF DLCS 
 5.1 Security. 
  

	 	5.1.1	As a condition of NPC’s execution of and continuing obligations under this Agreement, Comverge shall provide to NPC ***, as security for the performance of Comverge’s
obligations hereunder, either (a) a letter of credit from a Qualified Financial Institution in a form reasonably acceptable to NPC or (b) a cash deposit, in either case, in an amount equal to ***) (the “Performance Security”).
NPC shall have the right to draw upon the Performance Security, in its sole discretion, in the event Comverge fails to make any payments owing under this Agreement or to reimburse NPC for costs that NPC has incurred or may incur as a result of
Comverge’s failure to perform its obligations hereunder. The Development Security has been provided to NPC as of the date hereof. 

  

	 	5.1.2	With respect to any letter of credit posted by Comverge as Performance Security: (a) no later than thirty (30) days prior to the expiration date of such letter of credit,
Comverge shall cause the letter of credit to be renewed or replaced with another letter of credit in an equal amount; (b) in addition to the conditions 

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the
Securities and Exchange Commission. *** 
  

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specified in Section 5.1.1, NPC shall have the right to draw on such letter of credit, in its sole discretion (i) if such letter of credit has not
been renewed or replaced at least thirty (30) days prior to the date of its expiration or (ii) if the credit rating of the financial institution that issued such letter of credit has been downgraded such that the financial institution is
no longer considered a Qualified Financial Institution and Comverge has not caused a replacement letter of credit to be issued for the benefit of NPC within five (5) Business Days of such downgrade. 

 5.2 Netting of Payments. The Parties shall discharge mutual debts and payment obligations due and owing to each other on the same date through netting, in which
case all amounts owed by each Party to the other Party for amounts owed hereunder shall be netted so that only the excess amount remaining due shall be paid by the owing Party. 
 5.3 Transfer of DLCS Upon Expiration or Termination. The Parties hereby agree that, in consideration of the amounts paid by NPC to Comverge under this Agreement, immediately upon the expiration or termination
of this Agreement, all of Comverge’s right, title and interest in the DLCS shall transfer to NPC, without any further consideration or action by the Parties (except to the extent necessary to give effect to the provisions of this
Section 5.3). At the time of such transfer of the DLCS, the DLCS shall be free and clear of any and all liens, restrictions, security interests or other encumbrances. Comverge acknowledges and agrees that the provisions of this Section 5.3
provided a material inducement for NPC to enter into this Agreement. The Parties shall execute such agreements and documents as are necessary or desirable to affect or document such transfer of ownership of the DLCS. The Parties acknowledge and
agree that such transfer of ownership of the DLCS shall be done in a manner that avoids any interruption in the availability of the DLCS. Comverge shall not take any actions, or fail to take any actions, during the Term that would adversely affect
the transfer of the DLCS to NPC in accordance with the foregoing provisions. The provisions of this Section 5.3 shall survive the expiration or termination of this Agreement. 
 ARTICLE 6 - MARKETING, RECRUITMENT AND RETENTION 
 6.1 Marketing Plan. Comverge shall perform the marketing,
recruitment and retention activities set forth in Attachment 2A in an effort to solicit and retain Participants for the Program. Within fifteen (15) Business Days after the Start Date, the Parties shall have an initial meeting to structure the
marketing objectives of the Program. Comverge shall supply a draft of the Marketing Plan to NPC within thirty (30) Business Days after the Start Date. Within fifteen (15) Business Days of NPC’s receipt of the draft Marketing Plan, NPC
shall either approve the draft Marketing Plan or provide Comverge with comments that will allow for approval of the draft Marketing Plan. If NPC provides comments on the draft Marketing Plan, then Comverge shall incorporate such comments into the
Marketing Plan and re-submit the draft Marketing Plan for approval in accordance with the preceding procedures. Comverge shall provide periodic updates to the Marketing Plan as the Program progresses. Within fifteen (15) Business Days of
NPC’s receipt of each Marketing Plan update, NPC shall either approve the Marketing Plan 

  

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update or provide Comverge with comments that will allow for approval of the Marketing Plan update in accordance with the preceding procedures. 

6.2 Marketing Materials. Comverge shall provide all marketing materials to NPC for NPC’s approval prior to the utilization of such materials. Within
fifteen (15) Business Days of NPC’s receipt of such marketing materials, NPC shall either approve such marketing materials or provide Comverge with comments that will allow for approval of such marketing materials. If Comverge provides
comments on such marketing materials, then Comverge shall modify the marketing materials to reflect such comments and re-submit the marketing materials for approval in accordance with the preceding procedures. If NPC fails to approve or provide
comments on such marketing materials within such 15-Business Day period, then such marketing materials shall be deemed approved. 
 ARTICLE 7 - EQUIPMENT
INSTALLATION 
 7.1 Installation. Comverge shall install all DLCS Load Control Equipment and procure and manage Third Party Services, and perform
all other necessary activities to enable Dispatch of the DLCS, as set forth in Attachment 2B and the EDLCS, as set forth in Attachment 2C. 
 7.2 Supply
of Carrier Two-Way PCTs. Within forty-five (45) days of the Start Date, NPC shall provide Comverge, at no costs or expense to Comverge, with approximately *** commercial versions of the Carrier Two-way PCT for installation by Comverge in
accordance with this Agreement at Commercial Participating Facilities. 
 ARTICLE 8 - MAINTENANCE; SITE CLEAN UP 
 8.1 Scope of Work. Comverge shall maintain the DLCS and the EDLCS equipment and other components, including the Load Control Equipment, and perform all other
necessary activities, including those set forth in Section 8.3, to ensure the continued operation of the DLCS and the EDLCS throughout the Term, in accordance with this Agreement. 
 8.2 Tracking, Verification and Resolution of Participant Complaints. Comverge shall, in accordance with Good Industry Practice and Applicable Law, follow standard procedures for tracking, verifying and
resolving Participant complaints pursuant to Attachments 2A and 2B. 
 8.3 Preventive, Routine and Non-Routine Maintenance and Repairs. Comverge shall
be responsible for the preventive, routine and non-routine maintenance and repairs of the DLCS and the EDLCS for the Term of the Agreement. Maintenance shall be performed in accordance with Good Industry Practice and Applicable Law and on a basis
that ensures reliable safe operation, and shall be performed by knowledgeable, trained and experienced personnel utilizing proper equipment and tools. 
 8.4
EDLCS Inspection Program. Comverge shall implement an inspection program for the EDLCS to provide for the inspection of at least *** of the EDLCS Load 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange
Commission. *** 
  

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Control Devices each year to ensure proper system operation. The inspections shall ensure that each EDLCS Load Control Device is operational and has the
ability to control participants’ End-use Load(s). 
 8.5 Comverge Monitoring and Testing. Comverge shall be responsible for conducting routine
monitoring and testing to ensure that the EDLCS and the DLCS equipment is functioning as designed and implemented. Comverge shall provide NPC with prior written notice of such routine system monitoring and testing. System tests shall include, but
not be limited to, tests of the communication system to insure that Load Control Devices are receiving communications signals. 
 8.6 Program
Reporting. Comverge shall provide NPC with Program reports, data and support in accordance with Attachment 2G. 
 8.7 Site Clean Up. Comverge
shall collect and responsibly dispose of any trimmed wire clippings, unused screws or brackets, hazardous materials and any other material waste that may result from the installation of the Load Control Devices at a Participating Facility.

 ARTICLE 9 - MEASUREMENT AND VERIFICATION PROGRAM 
 9.1
NPC Responsibility. NPC shall be responsible for implementing the field work, data collection and analyses of the M&V Program in accordance with the requirements of Attachment 1C. Promptly following the third quarter of each Program Year,
the M&V Program shall be used to determine the kW Factor. The kW Factor shall be utilized to calculate Verified Demand Reduction, as provided in Attachment 1C. Within thirty (30) days after the completion of the Control Season, NPC shall
provide the report required pursuant to Attachment 1C. 
 9.2 Independent Verification. Comverge may at its own cost and expense conduct or cause to
be conducted an independent verification of field work, data collection and analyses of the M&V Program, provided that such independent verification shall not interfere with the implementation of the M&V Program . NPC shall reasonably
cooperate fully with Comverge, or any contractor retained by Comverge, in connection with any such independent verification. 
 ARTICLE 10 - SOFTWARE
SYSTEM 
 10.1 DLCS Software System. In order to operate the DLCS, Comverge shall implement (a) its own software, including the LMS Software
for operating the Comverge designed DLCS equipment, the BIS Software for tracking customer installations and procedures, and the M&V Software, all of which shall be hosted and run at Comverge facilities as provided in Attachment 2F and
(b) the Carrier Software for operating the Carrier Two-way thermostats, which shall be hosted and run at Carrier facilities. 
  

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 10.2 EDLCS Software System. In order to operate the EDLCS, Comverge shall utilize its own software to control
Comverge Load Control Devices and the Parties shall work together to utilize third-party software in accordance with Attachment 2C. 
 10.3 Grant of
Software License. Comverge hereby grants to NPC, and NPC accepts from Comverge a perpetual, irrevocable, non-exclusive, non-transferable, royalty-free license to Use the Software and Software Documentation as specified in Attachment 2F, in
connection with the DLCS. Comverge shall retain ownership of all Software and Software Documentation. Such license shall be assignable in connection with any assignment of this Agreement or any transfer of the DLCS, provided that such assignee shall
agree to the foregoing terms of such license. The provisions of this Section 10.3 shall survive the expiration or termination of this Agreement. 
 10.4
BIS Software Data. Upon NPC’s request, Comverge shall provide NPC with the data and information regarding the DLCS and EDLCS customers and devices from the BIS Software. Such data and information shall be provided in a form reasonably
requested by NPC and suitable for importing into third-party software. The provisions of this Section 10.4 shall survive the expiration or termination of this Agreement. 
 ARTICLE 11 - BILLING AND PAYMENT 
 11.1 Invoicing. All invoices and statements provided by Comverge under this
Agreement shall utilize NPC’s accounting codes and purchase order numbers, which accounting codes and purchase order numbers shall be provided by NPC within fifteen (15) Business Days of the Start Date. Comverge shall implement and
maintain standard financial control protocols in connection with all payments made or received under this Agreement. 
 11.2 Monthly Invoices and Annual
Statement. 
  

	 	11.2.1	Comverge shall prepare and submit to NPC a monthly invoice within ten (10) days of the end of each Program Month showing: (a) the calculation, with supporting details, of
the DLCS Monthly Payment and the EDLCS Monthly Payment pursuant to Attachment 1B, (b) a verified list of Load Control Devices installed in the previous month, including the number of Carrier Load Control Devices, Comverge Load Control Devices
and the description of the installation of each such device; (c) a cumulative list of Load Control Devices installed since the beginning of the Program Year; and (d) any other information reasonably requested by NPC.

  

	 	11.2.2	 Within forty-five (45) days after (a) the completion of a Control Season or (b) the expiration or termination of this Agreement, Comverge shall
prepare, and provide to NPC, a statement showing: (i) the calculation, with supporting details, of the Incremental Price, the DLCS Settlement Payment, the Maintained Price, the EDLCS Settlement Payment and the Settlement Payment pursuant to
Attachment 1B; (ii) the Annual Settlement Statement; (iii) a list of all Participating Facilities; (iv) a Program synopsis of the Control Season from 

  

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information provided by NPC including, all M&V Events and Dispatch Events, including the date, time and duration of each such event; (v) the
aggregate total of Dispatch Hours; (vi) the estimated Demand Reduction attributed to each Participating Facility for each Program Month; and (vii) any other information reasonably requested by NPC. 

 11.3 Payment Responsibility. NPC shall pay all undisputed portions of invoices and statements provided by Comverge pursuant to Section 11.2, by check or by
wire transfer, within thirty (30) days after receipt of the invoice. In the case where NPC is owed a Settlement Payment, Comverge shall pay the amount of such Settlement Payment within seventy-five (75) days after the end of the Control
Season. The reconciliation of any discrepancies or errors discovered in an invoice or statement shall be applied (netted either for or against) in the next applicable monthly invoice. 
 11.4 Late Payments. Remittances received by mail shall be considered to have been paid when due if the postmark indicates the payment was mailed on or before the date due. If any undisputed amount due is not
paid on or before the due date, such unpaid amount shall bear interest at the Late Payment Rate from the date that such amount was due and such interest shall be added to the next applicable monthly invoice. If a due date occurs on a weekend or
Holiday, the actual due date shall be deemed to be the next succeeding Business Day. 
 11.5 Billing Disputes. To resolve any billing dispute, the
Parties shall use the procedures set forth in Section 13.7. Within ten (10) Business Days of the date of a Party’s receipt of written notice of a dispute, each Party must furnish the other Party with detailed billing calculations for
the amount in dispute. Unless the Parties mutually agree otherwise, when a billing dispute is resolved, the Party owing an amount to the other Party shall pay the amount owed within ten (10) Business Days of the date of such resolution, with
interest calculated at the Late Payment Rate. 
 ARTICLE 12 - DEFAULT; TERMINATION 
 12.1 Events of Default of Comverge. 
 12.1.1 Any of the following shall constitute an Event of Default
of Comverge upon its occurrence and no cure period shall be applicable: 
  

	 	A.	Comverge’s dissolution or liquidation; provided, however, that a reorganization of Comverge into other or multiple entities shall not constitute dissolution or liquidation if
Comverge continues to guarantee its performance under this Agreement to NPC’s satisfaction, as determined in its sole discretion; 

  

	 	B.	 Comverge makes an assignment for the benefit of its creditors or makes or is the subject of the filing of a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the United States or under any insolvency act of any state, or Comverge voluntarily 

  

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takes advantage of any such law or act by answer or otherwise or is subject to any similar action or proceeding; 

  

	 	C.	Comverge’s fails to cause ***; 

  

	 	D.	Comverge’s failure to maintain ***; or 

  

	 	E.	Comverge transfers or assigns this Agreement in violation of Article 20. 

 12.1.2 Any of the following shall constitute an Event of Default of Comverge upon its occurrence unless (a) cured within thirty (30) days after the date of written notice of such Event of Default from NPC to
Comverge as provided for in Section 13.1, or (b) in the case of an Event of Default which cannot be cured within thirty (30) days, Comverge has within thirty (30) days after the date of written notice initiated actions reasonably
likely to cure such Event of Default and is thereafter diligently pursuing such cure; provided, however, such period shall not extend beyond sixty (60) days after the date of written notice from NPC concerning such Event of Default: 

 

	 	A.	Comverge’s failure to achieve ***; 

  

	 	B.	Comverge’s failure to make any payment required under this Agreement; 

  

	 	C.	Comverge’s failure to comply with any of its other material obligations under this Agreement; or 

  

	 	D.	Any of the representations or warranties made by Comverge under Section 15.1 is materially false or misleading. 

 12.2 Events of Default of NPC. 
 12.2.1 Any of the
following shall constitute an Event of Default of NPC upon its occurrence and no cure period shall be applicable: 
  

	 	A.	NPC’s dissolution or liquidation; provided, however, that a reorganization of NPC into other or multiple entities shall not constitute dissolution or liquidation if NPC
continues to guarantee its performance under this Agreement to Comverge’s satisfaction, as determined in its sole discretion; or 

  

	 	B.	NPC makes an assignment for the benefit of its creditors or makes or is the subject of the filing of a petition in bankruptcy or insolvency or for reorganization or arrangement
under the bankruptcy laws of the United States or under any insolvency act of any state, or NPC voluntarily takes 

 *** Portions of this
agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 

 

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advantage of any such law or act by answer or otherwise or is subject to any similar action or proceeding; or 

 12.2.2 Any of the following shall constitute an Event of Default of NPC upon its occurrence unless (a) cured within thirty (30) days after the
date of written notice of such Event of Default from Comverge to NPC as provided for in Section 13.1, or (b) in the case of an Event of Default which cannot be cured within thirty (30) days, NPC has within thirty (30) days after
the date of written notice initiated actions reasonably likely to cure such Event of Default and is thereafter diligently pursuing such cure; provided, however, such period shall not extend beyond sixty (60) days after the date of written
notice from Comverge concerning such Event of Default: 
  

	 	A.	NPC’s failure to comply with any of its material obligations under this Agreement; 

  

	 	B.	Any of the representations or warranties made by NPC under Section 15.2 is materially false or misleading. 

 12.2.3 The following shall constitute an Event of Default of NPC upon its occurrence unless cured within fifteen (15) Business Days after the date of
written notice from Comverge to NPC as provided for in Section 13.1: 
  

	 	A.	NPC’s failure to make any payment of an undisputed amount due hereunder (net of outstanding damages and of any other rights of offset that NPC may have pursuant to this
Agreement). For all late payments of undisputed amounts, regardless of any cure period, Section 11.4 applies. 

 12.3 Termination for
Events of Default. In addition to any other right or remedy available at law or in equity, either Party may, upon written notice to the other Party, terminate this Agreement if any one or more of the Events of Default of the other Party
described in this Article 12 occurs and is not cured within the cure periods set forth herein. Except as expressly provided in this Agreement, nothing in this Agreement shall be construed to limit any right or remedy available at law or in equity to
the Parties, including the right to any and all damages for any breach or other failure to perform hereunder, subject to section 18.1. All remedies in this Agreement shall survive the expiration or termination of this Agreement and are cumulative.

 12.4 Special Bankruptcy Provision. Because of the importance of this Agreement, it is agreed that in the event Comverge should ever seek protection
under the provisions of the bankruptcy laws of the United States or under any insolvency act of any state, and Comverge or its representative trustee considers whether to assume or reject this Agreement under such bankruptcy law or insolvency act
provisions, the appropriate standard to apply in consideration of rejection is a standard more rigorous than the usual business judgment standard, such more rigorous standard being appropriate to balance the burdens to the bankruptcy estate against
the impact on NPC electric ratepayers; and in such consideration, to give equal or greater weight to the public interest in the adequate, efficient and reasonable provision of electric utility service at 

  

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just and reasonable rates, including the effect that a rejection of this Agreement would have on NPC electric ratepayers. 
 ARTICLE 13 - CONTRACT ADMINISTRATION AND NOTICES 
 13.1 Notices in
Writing. Notices required by this Agreement shall be addressed to the other Party, including the other Party’s representative at the addresses noted in Attachment 2D. Any notice, request, consent or other communication required or
authorized under this Agreement to be given by one Party to the other Party shall be in writing. It shall either be personally delivered or mailed, postage prepaid, to the representative of said other Party. In addition, the notice, request, consent
or other communication may be sent by facsimile or other electronic means with a written confirmation by personally delivered or mail. Any such notice, request, consent or other communication shall be deemed to be given when delivered or mailed.

 13.2 Changes. Either Party may, by written notice to the other Party, change the representative or the address to which such notices and
communications are to be sent. 
 13.3 Authority of Representatives. The Parties’ designated representatives shall have authority to act for
their respective principals in all technical matters relating to performance of this Agreement and to attempt to resolve disputes or potential disputes. However, they shall not have the authority to amend or modify any provision of this Agreement.

 13.4 Operating Records. Comverge shall maintain books, records and supporting data, including such records and data as may be required by state or
federal regulatory authorities, related to this Agreement in conformity with generally accepted accounting principles. Such books, records and supporting data shall be kept for at least seven (7) years. 
 13.5 Audit Rights. NPC shall have the right to audit Comverge’s books, records and supporting data, relating to payment and verification of invoice or
statement information, upon reasonable prior notice and during regular business hours. Transactions hereunder, which are more than three (3) years old, shall not be subject to audit and are deemed final. If an audit determines that an
overpayment or underpayment has occurred, then notice of such overpayment or underpayment shall promptly be given to Comverge together with information that supports such a determination and the overpayment or underpayment, with interest calculated
at the Late Payment Rate, shall be applied (netted either for or against) in the next applicable monthly invoice. 
 13.6 Program Management
Procedures. The Parties shall design and institute Program management procedures within thirty (30) days following the Start Date, which procedures shall include, without limitation, a provision for regular meeting times to discuss the
Program and the matters set forth in Section 7.0 of Attachment 2B. 
 13.7 Dispute Resolution. 
  

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 13.7.1 The Parties agree that it is in the best interest of both Parties to attempt to resolve disputes
that arise under this Agreement in a quick and inexpensive manner. To that end, the Parties commit to attempt to resolve disputes hereunder informally. For all disputes that may arise pursuant to the Agreement, the Parties promptly, through their
designated representatives selected in the sole discretion of each Party (individually, the “Party Representative”, together, the “Parties’ Representatives”), shall negotiate with one another in good faith in order to reach
resolution of the dispute. Such negotiation shall commence within fourteen (14) days of the date of notice from one Party Representative to the other Party Representative notifying that Party of the nature of the dispute. 
 13.7.2 In the event that the Parties’ Representatives cannot agree to a resolution of a dispute within thirty (30) days after the commencement
of negotiations pursuant to Section 13.7.1, then either then either Party may submit the dispute for resolution by final and binding arbitration. Such arbitration shall be conducted in accordance with the Nevada Uniform Arbitration Act,
following the Commercial Arbitration Rules of the American Arbitration Association. Any award or determination rendered by the arbitrator may be entered in any court having jurisdiction. 
 ARTICLE 14 - FORCE MAJEURE 
 14.1 Definition of Force Majeure. The term “Force Majeure” means causes
or events that delay or prevent a Party’s performance of its obligations under this Agreement, but only to the extent that (a) such event of Force Majeure is not attributable to fault or negligence on the part of the affected Party,
(b) such event of Force Majeure is caused by factors beyond the affected Party's reasonable control, (c) despite taking all reasonable technical and commercial precautions and measures to prevent, avoid, mitigate or overcome such event of
Force Majeure and the consequences thereof, the affected Party has been unable to prevent, avoid, mitigate or overcome such event or consequences, including, without limitation: acts of God; sudden actions of the elements, such as floods,
earthquakes, hurricanes or tornadoes; sabotage; vandalism beyond that which could reasonably be prevented by a Party; terrorism; war; riots; fire; explosion; epidemic or pandemic; severe cold or hot weather or snow or other extreme or severe weather
conditions; blockades; insurrection; labor strikes; network or paging failure by reason outside of the Parties’ control; any disruption of electrical power in the NPC service territory preceding a Dispatch Event or during a Dispatch Event that
prevents the proper operation of the DLCS or the EDLCS. 
 14.2 Applicability of Force Majeure. Neither Party shall be responsible or liable for any
delay or failure in its performance under this Agreement due solely to conditions or events of Force Majeure, provided that: 
 14.2.1 the
non-performing Party gives the other Party prompt written notice describing the particulars of the occurrence of the event of Force Majeure; 
 14.2.2 the suspension of performance is of no greater scope and of no longer duration than is required by the event of Force Majeure; 
  

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 14.2.3 the non-performing Party proceeds with reasonable diligence to remedy its inability to perform and
provides weekly progress reports to the other Party describing actions taken to end the event of Force Majeure; and 
 14.2.4 when the
non-performing Party is able to resume performance of its obligations under this Agreement, the non-performing Party shall give the other Party written notice to that effect. 
 14.3 Termination Due to Extended Force Majeure. This Agreement may be terminated by a Party if the other Party's obligations hereunder have been excused by the occurrence of an event of Force Majeure pursuant
to this Article 14 for longer than twelve (12) consecutive months upon written notice to the affected Party, without further obligation by either Party except as to costs and balances incurred prior to the effective date of such termination.

 14.4 Effect of Force Majeure on Payments. In the event that during a Program Month Comverge is unable to provide or deliver Delivered Demand
Reduction due to the unavailability of a Participating Facility’s Load Control Device(s) as the result of an event of Force Majeure, then the Incremental Deemed Demand Reduction and the Maintained Deemed Demand Reduction for such Program Month
shall be reduced on a pro-rata basis to reflect the hours that such Load Control Device(s) was unavailable during such Program Month as a result of such event of Force Majeure, provided, that such event of Force Majeure was not solely caused by, or
solely the result of, NPC’s failure to perform its obligations in accordance with the provisions of this Agreement. 
 ARTICLE 15 - REPRESENTATIONS
AND WARRANTIES 
 15.1 Comverge’s Representations and Warranties. Comverge represents and warrants the following: 
  

	 	15.1.1	Comverge is a corporation duly organized under the laws of the State of Delaware. Comverge is qualified to do business in each jurisdiction where the failure to so qualify would
have a material adverse effect on its ability to perform its obligations hereunder or on the business or financial condition of Comverge. Comverge has all requisite power and authority to conduct its business, to own its properties, and to execute,
deliver and perform its obligations under this Agreement. 

  

	 	15.1.2	Comverge has the expertise, experience and qualifications to perform its obligations under this Agreement, including an understanding of NPC’s needs and requirements as it
relates to the DLCS and the EDLCS. 

  

	 	15.1.3	Comverge is properly licensed and permitted insofar as required in order to perform its obligations under this Agreement. 

  

 - 24 - 

	 	15.1.4	The execution, delivery and performance of its obligations under this Agreement by Comverge have been duly authorized by all necessary action, and do not and will not:

  

	 	A.	require any consent or approval of Comverge’s Board of Directors, or shareholders, other than that which has been obtained and is in full force and effect;

  

	 	B.	violate any provision of Applicable Law having applicability to Comverge or violate any provision in any formation documents of Comverge, the violation of which could have a
material adverse effect on the ability of Comverge to perform its obligations under this Agreement; 

  

	 	C.	result in a breach of or constitute a default under Comverge’s formation documents or bylaws, or under any agreement relating to the management or affairs of Comverge or any
indenture or loan or credit agreement, or any other agreement, lease or instrument to which Comverge is a party or by which Comverge or its properties or assets may be bound or affected, the breach or default of which could reasonably be expected to
have a material adverse effect on the ability of Comverge to perform its obligations under this Agreement; or 

  

	 	D.	result in, or require the creation or imposition of any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance of any nature (other than as may be
contemplated by this Agreement) upon or with respect to any of the assets or properties of Comverge now owned or hereafter acquired, the creation or imposition of which could reasonably be expected to have a material adverse effect on the ability of
Comverge to perform its obligations under this Agreement. 

 15.1.6 This Agreement is a valid and binding obligation of
Comverge. 
 15.1.7 The execution and performance of this Agreement by Comverge shall not conflict with or constitute a breach or default
under any contract or agreement of any kind to which Comverge is a party or any judgment, order, statute or regulation that is applicable to Comverge. 
 15.1.7 Comverge shall comply with all Applicable Laws, including but not limited to equal opportunity and affirmative action requirements and all applicable federal, state and local environmental laws and regulations
presently in effect or which may be enacted during the Term of this Agreement. 
 15.1.8 Comverge shall disclose to NPC, to the extent that,
and as soon as it is known to Comverge, any alleged violation of any environmental laws or regulations arising out of the construction or operation of any Participating Facility, or the alleged presence of Environmental Contamination at any
Participating Facility or on its site, or the existence 

  

 - 25 - 

 
of any past or present enforcement, legal or regulatory action or proceeding relating to such alleged violation or alleged presence of Environmental
Contamination. 
 15.1.9 The prices submitted in competition for award of this Agreement were arrived at independently, without, for the
purpose of restricting competition, any consultation, communication, or agreement with any other offeror or competitor relating to (1) those prices, (2) the intention to submit an offer, or (3) the methods or factors used to calculate
the prices offered. 
 15.1.10 No attempt has been made to induce any other party to submit or not to submit an offer for the purpose of
restricting competition. 
 15.1.11 No attempt has been made to influence the award of this Agreement, or to influence the administration of
the terms and conditions of this Agreement, through the offering to an employee, contractor or agent of NPC any items, money or entertainment, intended to improperly influence the award of this Agreement or to obtain favorable treatment under this
Agreement. 
  

	15.2	NPC’s Representations and Warranties. NPC represents and warrants the following: 

 15.2.1 NPC is a corporation duly organized under the laws of the State of Nevada and is qualified to do business in each other jurisdiction where the
failure to so qualify would have a material adverse effect on its ability to perform its obligations hereunder or on the business or financial condition of NPC. NPC has all requisite power and authority to conduct its business, to own its
properties, and to execute, deliver and perform its obligations under this Agreement. 
 15.2.2 The execution, delivery and performance of its
obligations under this Agreement by NPC have been duly authorized by all necessary corporate action, and do not and will not: 
  

	 	A.	subject to obtaining any required regulatory approvals, violate any provision of Applicable Law having applicability to NPC or violate any provision in any corporate documents of
NPC, the violation of which could have a material adverse effect on the ability of NPC to perform its obligations under this Agreement; 

  

	 	B.	result in a breach of or constitute a default under NPC’s charter or bylaws, or under any agreement relating to the management or affairs of NPC, or any indenture or loan or
credit agreement, or any other agreement, lease or instrument to which NPC is a party or by which NPC or its properties or assets may be bound or affected, the breach or default of which could reasonably be expected to have a material adverse effect
on the ability of NPC to perform its obligations under this Agreement; or 

  

 - 26 - 

	 	C.	result in, or require the creation or imposition of any mortgage, deed of trust, pledge, lien, security interest or other charge or encumbrance of any nature (other than as may be
contemplated by this Agreement) upon or with respect to any of the assets or properties of NPC now owned or hereafter acquired, the creation or imposition of which could reasonably be expected to have a material adverse effect on the ability of NPC
to perform its obligations under this Agreement. 

 15.2.3 This Agreement is a valid and binding obligation of NPC. 

15.2.4 The execution and performance of this Agreement shall not conflict with or constitute a breach or default under any contract or agreement of any
kind to which NPC is a party or any judgment, order, statute or regulation that is applicable to NPC. 
 ARTICLE 16 - INSURANCE 
 16.1 Comverge’s Insurance Requirements. Comverge shall obtain and maintain, or cause to be obtained and maintained, in effect throughout the Term of this
Agreement such insurance policies and coverage as is required by Applicable Law and as set out in Attachment 2E. 
 16.2 Changes to Insurance Minimum
Limits. NPC shall have the right, at times deemed appropriate by NPC during the Term of this Agreement, to request Comverge to increase the insurance minimum limits specified in Attachment 2E in order to maintain reasonable coverage amounts.
Comverge shall make all reasonable efforts to comply with such request at NPC’s expense. 
 16.3 Notice to NPC. The insurance policies to be
maintained by Comverge hereunder shall include the provisions or endorsements required by this Article 16 and Attachment 2E. If any such policy is maintained on a “claims made” form and is converted to an “occurrence form”, the
new policy shall be endorsed to provide coverage back to a retroactive date reasonably acceptable to NPC. 
 16.4 Certificates of Insurance Required.
Promptly following the Start Date, Comverge shall provide NPC a certificate(s) of insurance verifying the existence of insurance coverages and endorsements required by this Article 16 and Attachment 2E. Failure of Comverge to obtain such insurance
coverages or to provide NPC with the certificates of insurance, shall in no way relieve Comverge of the insurance requirements of this Article 16 or limit Comverge’s obligations and liabilities under any provision of this Agreement.

 16.5 Application of Proceeds. For the Term Comverge shall apply any and all insurance proceeds received in connection with the damage or
destruction of the Participating Facilities toward the repair, reconstruction or replacement of the Participating Facilities. 
 ARTICLE 17 - INDEMNITY

  

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 17.1 GENERAL. EACH PARTY (THE “INDEMNIFYING PARTY”) SHALL FULLY INDEMNIFY AND DEFEND THE OTHER PARTY AND
EACH OF THE OTHER PARTY’S SUBSIDIARIES AND AFFILIATES, AND THE PARTNERS, MEMBERS, PARTICIPANTS, PRINCIPALS, REPRESENTATIVES, SHAREHOLDERS, DIRECTORS, TRUSTEES, OFFICERS, AGENTS, EMPLOYEES, CUSTOMERS, SUCCESSORS AND ASSIGNS OF EACH OF THEM (THE
“INDEMNIFIED PARTY”) FROM AND AGAINST ANY AND ALL LOSSES, COSTS, DAMAGES, INJURIES, LIABILITIES, CLAIMS, DEMANDS, PENALTIES AND INTEREST, INCLUDING REASONABLE ATTORNEYS’ FEES, DIRECTLY OR INDIRECTLY CAUSED BY THE MATERIAL BREACH OF,
OR THE PERFORMANCE OR NON-PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT. 
 17.2 Environmental. Comverge shall indemnify, defend and hold NPC,
and each of its subsidiaries and affiliates, and the partners, members, participants, principals, representatives, shareholders, directors, trustees, officers, agents, employees, successors and assigns of each of them (collectively, “NPC
Parties”) harmless from and against all claims, demands, losses, liabilities, penalties and expenses (including reasonable attorneys’ fees) for personal injury or death to persons, damage to or loss of property, and response costs relating
to Environmental Contamination, arising out of, resulting from or caused by the violation of any Environmental Laws or the negligent or tortious acts, errors or omissions of Comverge (or any of its or any of its employees, directors, officers,
agents, representatives, affiliates, customers, successors, or assigns (collectively “Comverge Parties”)), except to the extent that such violation, injury, death, loss, liability or response costs are directly attributable to the
negligent or tortious acts, errors or omissions of NPC or NPC Parties. 
 17.3 Intellectual Property/ EDLCS. 
 17.3.1 Comverge shall indemnify, defend and hold NPC and NPC Parties harmless from and against all losses incurred by NPC or NPC Parties arising out of or
connected with a thirty party claim relating to: infringement of such third party’s patent, copyright, trademark, trade secret, confidentiality or other right related to the DLCS, or any related equipment or software associated with the DLCS
and, to the extent provided by Comverge, the EDLCS; provided, that (a) such use by NPC or NPC Parties that infringes is consistent with the use described in or contemplated by this Agreement; (b) such infringement or misappropriation is
not based solely on the combination or integration of any software or any other device or product not contemplated by this Agreement; and (c) such design or software, if any, was not effected by NPC or NPC Parties with NPC’s knowledge
(actual or constructive) of any infringement or misappropriation issue related thereto. 
 17.3.2 NPC shall indemnify, defend and hold
Comverge and Comverge Parties harmless from and against all losses incurred by Comverge or Comverge Parties arising out of or connected with a thirty party claim relating to: infringement of such third party’s patent, copyright, trademark,
trade secret, confidentiality or other right related to the EDLCS or any related equipment or software associated with the EDLCS, except to the extent provided by Comverge and except to the extent that such injury, death, loss, liability or 

  

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response costs are directly attributable to the negligent or tortious acts, errors or omissions of Comverge or Comverge Parties. 
 17.4 Procedures. 
 17.4.1 Promptly after receipt by a
Party of any claim or notice of the commencement of any action, administrative or legal proceeding, or investigation as to which the indemnity provided for in this Article 17 may apply, the Indemnified Party shall notify the Indemnifying Party in
writing of such fact, but the failure so to notify such Indemnifying Party of any such action shall not relieve the Indemnifying Party from any liability which it may have to the Indemnified Party except to the extent that such failure to notify
shall adversely affect the rights of the Indemnifying Party. The Indemnifying Party shall be entitled to participate at its own expense in the defense or, if it so elects, to assume the defense thereof with counsel designated by the Indemnifying
Party and satisfactory to the Indemnified Party; provided, however, that if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be
legal defenses available to it which are different from or additional to, or inconsistent with, those available to the Indemnifying Party, the Indemnified Party shall have the right to select and be represented by separate counsel, at the
Indemnifying Party’s expense, unless a liability insurer is willing to pay such costs. 
 17.4.2 The Indemnifying Party shall bear the
reasonable fees and expenses of the counsel retained by the Indemnified Party if (a) the Indemnified Party shall have retained such counsel in accordance with the preceding paragraph 17.4.1, (b) the Indemnifying Party shall elect not to
assume the defenses of such action, (c) the Indemnifying Party, within a reasonable time after notice of the commencement of the action, shall not have employed counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party, or (d) the Indemnifying Party shall have authorized the employment of counsel for the Indemnified Party at the expense of the Indemnifying Party. An Indemnified Party shall not enter into a settlement or other compromise with
respect to any claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. The Indemnifying Party shall not enter into a settlement or other compromise with respect to any claim
against the Indemnified Party without the Indemnified Party’s consent unless (i) there is no finding or admission of any violation of Applicable Law or any violation of the rights of any person, and (ii) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party. If the Indemnifying Party fails to assume the defense of a claim meriting indemnification, the Indemnified Party may at the expense of the Indemnifying Party contest, settle or pay
such claim, provided that settlement or full payment of any such claim may be made only following consent of the Indemnifying Party or, absent such consent, with the written opinion of the Indemnified Party’s counsel that such claim is
meritorious or warrants settlement. 
 17.4.3 Except as otherwise provided in this Article 17, in the event that a Party is obligated to
indemnify and hold the other Party and its successors and assigns harmless 

  

 - 29 - 

 
under this Article 17, the amount owing to the Indemnified Party shall be the amount of the Indemnified Party’s actual loss net of any insurance
proceeds received by the Indemnified Party following a reasonable effort by the Indemnified Party. 
 17.5 Survival. The provisions of this Article 17
shall survive the expiration or termination of this Agreement. 
 ARTICLE 18 - LIMITATION OF LIABILITY 
 18.1 LIMITATION OF LIABILITY. NEITHER PARTY NOR ITS SUBSIDIARIES OR AFFILIATES NOR THE OFFICERS, AGENTS, EMPLOYEES, REPRESENTATIVES, PARTICIPANTS, PARTNERS,
MEMBERS, SHAREHOLDERS, PRINCIPALS, DIRECTORS, TRUSTEES, SUCCESSORS OR ASSIGNS OF ANY OF THEM SHALL IN ANY EVENT BE LIABLE TO THE OTHER PARTY OR ITS SUBSIDIARIES OR AFFILIATES OR THE OFFICERS, AGENTS, EMPLOYEES, REPRESENTATIVES, PARTICIPANTS,
PARTNERS, MEMBERS, SHAREHOLDERS, PRINCIPALS, DIRECTORS OR TRUSTEES OF ANY OF THEM FOR INCIDENTAL, PUNITIVE, CONSEQUENTIAL (EXCEPT AS PROVIDED FOR HEREIN), SPECIAL, OR INDIRECT DAMAGES OF ANY NATURE, ARISING AT ANY TIME, FROM ANY CAUSE WHATSOEVER,
WHETHER ARISING IN TORT, CONTRACT, WARRANTY, STRICT LIABILITY, BY OPERATION OF LAW OR OTHERWISE, CONNECTED WITH OR RESULTING FROM PERFORMANCE OR NON-PERFORMANCE UNDER THIS AGREEMENT. NOTHING IN THIS ARTICLE 18 SHALL BE DEEMED TO AFFECT OR LIMIT THE
RIGHT OF AN INDEMNIFIED PARTY TO CLAIM INDEMNIFICATION FROM THE INDEMNIFYING PARTY UNDER ARTICLE 17. THE PROVISIONS OF THIS ARTICLE 18 SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT. 
 ARTICLE 19 - COMPLIANCE WITH LAW AND REGULATORY REQUIREMENTS 
 19.1
Compliance with the Law. Each Party shall at all times comply with all Applicable Laws. As applicable, each Party shall give all required notices and shall procure and maintain all necessary governmental licenses, necessary for performance of
this Agreement, and shall pay its respective charges and fees in connection therewith. 
 ARTICLE 20 - ASSIGNMENT AND OTHER TRANSFER RESTRICTIONS 

 20.1 No Assignment Without Consent. Except as permitted below, neither Party shall assign this Agreement or any portion hereof, without the prior
written consent of the other Party, which consent shall not be unreasonably withheld or delayed. Prior notice of any such assignment shall be given to the other Party. Notwithstanding the above: 
  

	 	20.1.1	 This Agreement may be assigned by Comverge, without the prior approval of NPC: (a) as part of a reorganization, merger, share exchange, consolidation or sale

  

 - 30 - 

	 	 
or disposition of all or substantially all of the assets of Comverge; or (b) to a wholly owned subsidiary of Comverge, where Comverge shall be a
guarantor. In the event of any such assignment, Comverge shall remain liable under this Agreement until (x) NPC consents to the release of Comverge (which shall not be unreasonably withheld or delayed) and (y) Comverge’s successor or
assignee consents in writing to be bound by the obligations of Comverge. This Agreement may also be collaterally assigned by Comverge, without the prior approval of NPC, for the benefit of Comverge’s lenders or in connection with an initial
public offering. 

  

	 	20.1.2	This Agreement may be assigned by NPC, without the prior approval of Comverge: (a) as part of a reorganization, merger, share exchange, consolidation or sale or disposition of
all or substantially all of the assets of NPC; (b) to Sierra Pacific Power or an “affiliated interest” as that term is defined in the Nevada Public Utility Act; (c) to a legally authorized governmental or quasi-governmental
agency charged with providing retail electric service in Nevada; or (d) as otherwise required by Applicable Law. In the event of any such assignment, NPC shall remain liable under this Agreement until (x) Comverge consents to the release
of NPC (which shall not be unreasonably withheld or delayed) and (y) NPC’s successor or assignee consents in writing to be bound by the obligations of NPC. This Agreement may also be collaterally assigned by NPC, without the prior approval
of Comverge, for the benefit of NPC’s lenders. 

 ARTICLE 21 - JOINT INTEREST 
 21.1 Cooperation by Parties. NPC and Comverge believe it to be in their joint interest that the Program achieves a high degree of success and reaches the maximum
possible number of Participants. Accordingly, NPC and Comverge intend that, during the Term of the Agreement, the Parties shall, subject to the terms and conditions of this Agreement and of all applicable regulatory requirements which may exist
during the Term of this Agreement work together in good faith to offer and provide to the customers of NPC the services described in this Agreement. 
 21.2
Comverge Cooperation. 
  

	 	21.2.1	Comverge shall work closely, cooperatively and collaboratively with NPC staff and personnel, the M&V Contractor and other NPC contractors in support of Program activities and
procedures; 

  

	 	21.2.2	Comverge shall (a) work closely, cooperatively and collaboratively with, and provide information as necessary to the NPC Energy Education Team and (b) provide support at
energy education related events at the request of NPC. 

 ARTICLE 22 - MISCELLANEOUS 
  

 - 31 - 

 22.1 Waiver. The failure of either Party to enforce or insist upon compliance with or strict performance of any of
the terms or conditions of this Agreement, or to take advantage of any of 
 its rights thereunder, shall not constitute a waiver or relinquishment of any
such terms, conditions or rights, but the same shall be and remain at all times in full force and effect. 
 22.2 Taxes/ Permits. Comverge shall be
responsible for any and all present or future federal, state, municipal or other lawful taxes applicable by reason of the ownership and operation of the DLCS under this Agreement, and all ad valorem taxes relating to the DLCS. For equipment that
Comverge installs, Comverge shall be responsible for obtaining required permits with reasonable support from NPC. For equipment that NPC installs, NPC shall be responsible for obtaining required permits. 
 22.3 Disclaimer of Third Party Beneficiary Rights. In executing this Agreement, NPC does not, nor should it be construed to, extend its credit or financial
support for the benefit of any third parties lending money to or having other transactions with Comverge. Nothing in this Agreement shall be construed to create any duty to, or standard of care with reference to, or any liability to, any person not
a party to this Agreement. 
 22.4 Relationship of the Parties. 
  

	 	22.4.1	This Agreement does not create an association, joint venture or partnership between the Parties and does not impose any partnership obligation or liability upon either Party.
Neither Party shall have any right, power or authority to enter into any agreement or undertaking for, or act on behalf of, or to act as an agent or representative of, the other Party. 

  

	 	22.4.2	The relation of Comverge to NPC shall be that of an independent contractor. Any provisions of this Agreement which may appear to give NPC the right to direct or control Comverge as
to details of performing Comverge’s obligations hereunder, shall be deemed to mean that Comverge shall follow NPC’s desires in the results of the work and not in the means by which the work is to be accomplished. Comverge shall have the
complete right, obligation and authoritative control over the work as to the manner, means and details as to how to perform its obligations hereunder. 

  

	 	22.4.3	Comverge shall be solely liable for the payment of all wages, taxes and other costs related to the employment of persons to perform such services, including all federal, state and
local income, social security, payroll and employment taxes and statutorily mandated workers’ compensation coverage. None of the persons employed by Comverge shall be considered employees of NPC for any purpose; nor shall Comverge represent to
any person that he or she is or shall become a NPC employee. 

 22.5 *** 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the
Securities and Exchange Commission. *** 
  

 - 32 - 

 22.6 Press Releases. Comverge may not issue a press release announcing this Agreement, the Target Delivered Demand
Reduction or any other terms and conditions of this Agreement, without the prior consent of NPC, which shall not be unreasonably withheld, conditioned or delayed. 
 22.7 Confidentiality. The Parties agree that the NDA shall govern this Agreement and the exchange and disclosure of Confidential Information, as defined in the NDA. 
 22.8 Diverse Supplier Information. Comverge shall notify NPC and provide NPC with appropriate certification if any of its vendors, suppliers or subcontractors are a business enterprise that is at least
fifty-one percent (51%) owned and operated by women, minority, or service-disabled veteran group members. 
 22.9 Integrity. In the performance
of its obligations hereunder, Comverge agrees to conduct itself in a professional manner, and to treat others with honesty, integrity, respect, fairness and dignity. 
 22.10 Survival of Obligations. The expiration or termination of this Agreement shall not relieve the Parties of obligations that are specified herein to survive such expiration or termination or that by their
nature should survive such expiration or termination, prior to the term of the applicable statute of limitations. 
 22.11 Severability. In the event
any of the terms, covenants or conditions of this Agreement, its Attachments, or the application of any such terms, covenants or conditions, shall be held invalid, illegal or unenforceable by any court or administrative body having jurisdiction, all
other terms, covenants and conditions of this Agreement and their application not adversely affected thereby shall remain in force and effect. 
 22.12
Complete Agreement; Amendments. The terms and provisions contained in this Agreement and the NDA constitute the entire agreement between NPC and Comverge with respect to the subject matter hereof and supersede all previous communications,
representations or agreements, either oral or written, between NPC and Comverge with respect to the subject matter hereof. This Agreement may be amended, changed, modified or altered, provided that such amendment, change, modification or alteration
shall be in writing and signed by both Parties. 
 22.13 Binding Effect. This Agreement, as it may be amended from time to time, shall be binding upon
and inure to the benefit of the Parties’ respective successors-in-interest, legal representatives and assigns. 
 22.14 Headings. Captions and
headings used in the Agreement are for ease of reference only and do not constitute a part of this Agreement. 
 22.15 Counterparts. This Agreement
may be executed in any number of counterparts, and each executed counterpart shall have the same force and effect as an original instrument. All counterparts shall constitute a single instrument. 
  

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 22.16 Governing Law. The interpretation and performance of this Agreement and each of its provisions shall be
governed and construed in accordance exclusively with the laws of the State of Nevada without regard to the conflicts of laws provisions of such state. 
 [SIGNATURES APPEAR ON FOLLOWING PAGE] 
  

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 IN WITNESS WHEREOF, the signatories hereto represent that they have been appropriately authorized to
enter into this Agreement on behalf of the Party for whom they sign. This Agreement is hereby executed as of the date first above stated. 
  

									
	COMVERGE, INC.	 		 	NEVADA POWER COMPANY
					
	By:	 	 	 		 	By:	 	 
		 	Name:	 		 		 	Name:
		 	Title:	 		 		 	Title:

  

 - 35 - 

 ATTACHMENT 1 – TARGET DELIVERED DEMAND REDUCTION; 
 COMPENSATION; MEASUREMENT & VERIFICATION 
  

 1 - 1 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 1A 
 TARGET DELIVERED DEMAND REDUCTION 
 The following table describes the “Target Delivered Demand
Reduction” for the DLCS for each Program Year. 
  

			
	 Program Year
	  	Target Delivered
Demand Reduction
(MW)*
	 PY 1
	  	***
	 PY 2
	  	***
	 PY 3
	  	***

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment.
Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1A - 1 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 1B 
 PAYMENT CALCULATIONS 
  

	I.	Mobilization Payment 

 Within thirty
(30) days of the Start Date, NPC shall pay Comverge *** for Comverge’s mobilization costs required for the Program (the “Mobilization Payment”). The Mobilization Payment shall be considered as advanced Monthly Payments. ***

  

	II.	Deemed Demand Reduction 

  

	 	A.	Deemed Demand Reduction: Deemed Demand Reduction (DDR) is equal to *** 

  

	 	B.	Incremental Deemed Demand Reduction: The Incremental Deemed Demand Reduction for a Program Month shall be computed as follows: 

 Inc. DDRi = 
  

			
	

	  	(Proxy kW Factor)i × (Monthly Available
Devices)i × (1.11)
	  	

 Where: 
 i = Device Population (dp1 through dp2) 
 *** 
 Monthly Available Devices = (Mo. Devices)i
 × (1 – Proxy %NRD)i 
 Where: 
 “Mo. Devices” means the total number of Load Control Devices within a Device Population installed during the Program Month. 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the
Securities and Exchange Commission. *** 
  

 1B - 1 
 PROPRIETARY AND CONFIDENTIAL 

 “Proxy %NRD” or “Proxy Percentage of Non-Responding Devices” is a proxy for the
Percentage of Non-Responding Devices within a Device Population which shall be updated at the end of each Control Season based upon the %NRD for each Device Population as determined by M&V. 
 “Proxy kW Factor” is a proxy for the kW Factor for each Device Population which shall be updated at the end of each Control Season based upon
the kW Factor for each Device Population as determined by M&V. 
  

	 	C.	Maintained Deemed Demand Reduction. The Maintained Deemed Demand Reduction shall be computed as follows: 

 *** 
  

	 	D.	Proxies at Start Date. As of the Start Date and until PY1 the Proxy %NRD and Proxy kW Factor shall initially be set as follows: 

 *** 
 *** Portions of this agreement marked by *** have been
omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1B - 2 
 PROPRIETARY AND CONFIDENTIAL 

	III.	Pricing Calculations 

  

	 	A.	Incremental Price: The “Incremental Price” or “Inc. Price” in USD ($) shall be calculated as follows: 

 *** 
  

	 	B.	Maintenance Price: The “Maintenance Price” or “Maint. Price” in USD ($) shall be calculated as follows: 

 *** 
 *** Portions of this agreement marked by *** have been
omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1B - 3 
 PROPRIETARY AND CONFIDENTIAL 

	IV.	DLCS Delivered Demand Reduction Payment Schedule 

  

	 	A.	Payment Structure: Subject to Article I above, NPC shall pay Comverge for DLCS Delivered Demand Reduction by paying Comverge ongoing DLCS Monthly Payments for Inc. DDR and
Maint. DDR as Load Control Devices are installed and maintained, with Annual Settlement based upon reconciling Deemed Demand Reduction with Verified Demand Reduction after the Control Season ends. 

  

	 	B.	DLCS Monthly Payments. The “DLCS Monthly Payments” shall be as follows: 

 *** 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment.
Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1B - 4 
 PROPRIETARY AND CONFIDENTIAL 

	 	C.	DLCS Annual Settlement Statement: Within 45 days of (a) the end of a Control Season or (b) the expiration or termination of this Agreement, NPC shall issue an
Annual Settlement Statement to settle any differences between Deemed Demand Reduction and Verified Demand Reduction and to set the new values for all proxies and prices. Any differences between Deemed Demand Reduction and Verified Demand Reduction
shall be calculated as follows: 

 *** 
  

	V.	EDLCS Delivered Demand Reduction Payment Schedule. 

  

	 	A.	Payment Structure: Subject to Article I above, NPC shall pay Comverge for EDLCS Delivered Demand Reduction by paying Comverge ongoing EDLCS Monthly Payments for Maint. DDR as
Load Control Devices are maintained, with Annual Settlement based upon reconciling Deemed Demand Reduction with Verified Demand Reduction after the Control Season ends. 

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the
Securities and Exchange Commission. *** 
  

 1B - 5 
 PROPRIETARY AND CONFIDENTIAL 

	 	B.	EDLCS Monthly Payments. The “EDLCS Monthly Payments” for PY1 shall be as follows: 

 *** 
 The EDLCS Monthly Payments for PY2 and
PY3 shall be as follows: 
 *** 
  

	 	C.	EDLCS Annual Settlement Statement: Within 45 days of (a) the end of a Control Season or (b) the expiration or termination of this Agreement, NPC shall issue an
Annual Settlement Statement to settle any differences between Deemed Demand Reduction and Verified Demand Reduction and to set the new values for all proxies and prices. Any differences between Deemed Demand Reduction and Verified Demand Reduction
shall be calculated as follows: 

 *** 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange
Commission. *** 
  

 1B - 6 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 1C 
 MEASUREMENT AND VERIFICATION PROGRAM 
  

	1.0	Summary 

 This attachment has been prepared to detail the purpose
and procedures of the DLCS and the EDLCS measurement and verification program (the “M&V Program”). The M&V Program shall be planned, deployed, operated and reported by a third party measurement and verification contractor (the
“M&V Contractor”) to NPC. NPC shall be responsible for payment of the costs due to the M&V Contractor. NPC and Comverge shall be provided access to all data and analysis performed by the M&V Contractor. 
 The M&V Program shall determine the Verified Demand Reduction for the DLCS and the EDLCS using the following protocols that ensure a 90/10 confidence/precision level
derived from observed measurements. 
  

	2.0	Calculation of Verified Demand Reduction 

 The Verified Demand
Reduction (VDR) shall be calculated as follows: 
 *** 
  

	3.0	Load Control Device Populations 

 *** Portions of this agreement
marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1C - 1 
 PROPRIETARY AND CONFIDENTIAL 

 *** 
  

	4.0	Sample Sizes 

 The “Minimum Sample Size” or
“MSS” for each sampling task shall be *** 
  

	5.0	M&V Samples 

 An “M&V Sample” means ***

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential
treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1C - 2 
 PROPRIETARY AND CONFIDENTIAL 

	6.0	*** 

 *** Portions of this agreement marked by *** have been
omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1C - 3 
 PROPRIETARY AND CONFIDENTIAL 

	7.0	*** 

 *** Portions of this agreement marked by *** have been
omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1C - 5 
 PROPRIETARY AND CONFIDENTIAL 

	8.0	Determination of kW Factor 

 8.1 Hourly Demand
Calculation. Hourly Demand is calculated for each End-use Load as follows: 
 *** 
 8.2 Hourly Demand Determination. Hourly Demand shall be calculated for each End-use Load using the Adjusted kW for each End-use Load and the
Hourly Runtime for End-use Loads as follows: 
 *** 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange
Commission. *** 
  

 1C - 6 
 PROPRIETARY AND CONFIDENTIAL 

 The Hourly Runtime datasets shall be reported for each hour and shall be concurrently accessible to the
Parties and the M&V Contractor. 
 8.3 Average Device Demand Determination. “Average Device Demand” for each Device
Population is the sum of the Hourly Demands of each End-use Load within the Device Population divided by the Available Devices within the Device Population. 
 8.4 Baseline Device Demand Determination. The “Baseline Device Demand” for each Device Population and each M&V Event is derived from ***. Each hour from ***. Pacific Prevailing Time of *** with
the highest Average Device Demands during any of the hours from *** Pacific Prevailing Time is averaged to create the Baseline Device Demands used to calculate the Offset Factors and against which to compare the Average Device Demands during M&V
Events. 
 8.5 Offset Factor Determination. “Offset Factor” is calculated as the ratio of the Average Device Demand in the
hour preceding an M&V Event to the Baseline Device Demand during that same hour. 
 8.6 Adjusted Baseline Device Demand. The
“Adjusted Baseline Device Demand” is calculated for each Device Population and each M&V Event for each Dispatch Hour between *** Pacific Prevailing Time by multiplying the Baseline Device Demand in that hour by the Offset Factor.

 8.7 Average Device Demand Reduction Determination. The “Average Device 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has
been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1C - 7 
 PROPRIETARY AND CONFIDENTIAL 

 
Demand Reduction” is calculated ***. 
 8.8
*** 
  

	9.0	M&V Process 

 This section describes the activities that NPC
shall contract out to an M&V Contractor and the responsibilities of the Parties to support this process. 
 9.1 M&V Planning

 NPC shall contract with an M&V Contractor and inform Comverge within ten (10) days of choosing such contractor. The Parties shall
execute a Non-Disclosure Agreement with the M&V Contractor prior to commencement of activities by the M&V Contractor. 
 NPC shall
provide to Comverge within ninety (90) days of the Start Date in PY1, and on March 1 in PY2 and PY3, an annual M&V plan supplied by the selected M&V Contractor. The plan shall include: 
  

	 	•	 	 A listing of Participants for each strata and Similar Device Group in the Device Populations; 

  

	 	•	 	 An analysis that verifies confidence and accuracy predictions for each sampled population or group; 

  

	 	•	 	 M&V activities and responsibilities of the M&V Contractor, Comverge, and NPC; 

  

	 	•	 	 An annual schedule of activities; 

  

	 	•	 	 Format of the transmission of the Average Device Demand Reduction reported within twenty-four (24) hours of each event; 

  

	 	•	 	 A sample Annual Settlement Statement; 

  

	 	•	 	 Complete, commented software code that implements the algorithms which calculate the “Adjusted Baseline Device Demand”, the “Average Device Demand
Reduction” and the “kW Factor.” 

 Comverge shall review this plan and provide detailed comments within
thirty (30) days of receipt. 
 9.2 Sample Analysis 
 During installation of the Load Control Device the End-use Load size shall be collected by 
 *** Portions of this agreement
marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1C - 8 
 PROPRIETARY AND CONFIDENTIAL 

 
Comverge and be made available to the M&V Contractor. NPC shall make available similar information for any existing program participants. 
 Samples shall be recruited on a random basis. All parties shall make every reasonable effort to enable as close to real-time monitoring of the population samples prior
to Dispatch of M&V Events. 
 *** Comverge shall provide the Participants list to NPC and the M&V Contractor and NPC shall instruct the M&V
Contractor to calculate the proportion of Participants within each strata of each Device Population and the number of Similar Devices within each Device Population. The data and calculation results shall be made available to Comverge for review.

 The M&V Contractor shall sample Participants and Load Control Devices in equal proportion to the population strata within each Device Population
unless otherwise agreed to by Comverge. 
 NPC shall contract with the M&V Contractor or another third party to perform inspections of the Load Control
Devices. 
 9.3 M&V Sample Recruitment 
 NPC
shall be responsible for ensuring that the M&V Samples, Communications Sampled Devices, and Inspected Devices are recruited. Any incentives provided in order to recruit these samples shall be the responsibility of NPC. 
 NPC shall provide Comverge with all necessary information about the sampled Participants and Load Control Devices in order to be able to respond to customer inquiries in
a timely manner. This information shall include: 
  

	 	•	 	 Contact information for the M&V installers in Las Vegas; 

  

	 	•	 	 Descriptions of incentives if any; 

  

	 	•	 	 Installation schedules by customer; and 

  

	 	•	 	 Incentive mailing dates by customer. 

 9.4 M&V Installations 
 In the case where end use metering is required the M&V Contractor is responsible for all aspects of installation,
operations and ongoing maintenance of such metering. 
 The M&V Contractor shall schedule installations and conduct these installations in a timely and
professional manner. The M&V Contractor shall provide to NPC and Comverge a copy of the M&V Participant agreements in advance of recruitment. 
 The
M&V Contractor shall provide Comverge a monthly report of active M&V Participants starting with the end of the month of the first activation/installation and monthly through each 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the
Securities and Exchange Commission. *** 
  

 1C - 9 
 PROPRIETARY AND CONFIDENTIAL 

 
Control Season. 
 The M&V Contractor shall develop ***.

 9.5 Demand Profile Sharing 
 To support the
M&V analysis, system operations and verification by Comverge it is necessary to share demand profile information between Comverge and the M&V Contractor. The M&V Contractor has access to meter data for the existing system and Comverge
has the run time data for the Two way PCTs. 
 The M&V Contractor and Comverge shall post the demand profile data using secure FTP to the secure Comverge
website. Separately, the M&V Contractor and Comverge shall share the customer information for each profile. 
 This hourly data will allow each party to
estimate load available to the nearest hour. 
 In the case where issues with the data are identified each party with notify the other as soon as practical.

 9.6 Baseline Calculation 
 The M&V
Contractor shall transmit to Comverge each day prior to the beginning of each potential M&V Event day *** to be used in calculating the Baseline Device Demand. 
 9.7 M&V Event processing 
 NPC shall notify the M&V Contractor immediately when it becomes aware that a Dispatch
Event has been initiated and all relevant parameters associated with the event such as start time, end time, populations under curtailment and curtailment strategies. 
 On the day following an M&V Event the M&V Contractor shall transmit to Comverge for each Device Population: 
  

	 	•	 	 The Baseline Device Demand; 

  

	 	•	 	 The Average Device Demand during the M&V Event; 

  

	 	•	 	 The Offset Factor; and 

  

	 	•	 	 The Average Device Demand Reduction for each hour of the M&V Event for each Device Population. 

 9.8 M&V Reporting 
 *** Portions of this agreement
marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1C-10 
 PROPRIETARY AND CONFIDENTIAL 

 The M&V Contractor shall deliver reports after each M&V Event and shall deliver an annual report fifteen
(15) days after the end of the Control Season. NPC shall review and approve the reports in a timely manner to support Annual Settlement and going forward adjustments to ***. 
 The annual report shall include: 
  

	 	•	 	 A summary of all M&V Events; 

  

	 	•	 	 The Average Device Demand Reduction for each hour of the M&V Event for each Device Population; and 

  

	 	•	 	 The kW Factor for each Device Population 

 10.0 Network Monitoring 
 The M&V Contractor currently operates a communications network monitoring system with ***. Working with the M&V
Contractor, the Parties shall increase the number of communications monitoring points throughout the Program service territory to ***, including relatively hard to reach areas which shall be determined by field survey. 
 The Parties shall work together in an effort to provide the capability for continuous testing and monitoring by the Parties of the DLCS and the EDLCS during the Control
Season. 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which
confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 1C-11 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 2 
 STATEMENT OF WORK 
  

 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 2A 
 MARKETING, RECRUITMENT AND RETENTION 
 1.0 Scope of Work. Comverge shall perform the marketing,
recruitment and retention activities required to solicit and retain Participants for the Program, which includes, but is not limited to, the development of the marketing plan for the Program (the “Marketing Plan”) and the development of
enrollment, marketing and education materials. NPC shall have final approval of all marketing and recruitment activities. The Program shall be evaluated by both Parties annually to monitor customer recruitment and retention. 
 2.0 Marketing Plan. NPC and Comverge shall work together to develop the Marketing Plan pursuant to Section 6.1. NPC and Comverge shall mutually agree on the
final components of the Marketing Plan. The Marketing Plan shall include: 
  

	 	2.1	Identifying and quantifying the target markets. 

  

	 	2.2	Developing a communications plan to reach the target markets. 

  

	 	2.3	Developing the concept for marketing collateral. 

  

	 	2.4	The Marketing plan shall allow Comverge the following channels which may be used (collectively below are the “Marketing Channels”): 

  

	 	•	 	 Monthly Direct Mail, 

  

	 	•	 	 Quarterly Bill Inserts, if mutually agreed to targets can be selected 

  

	 	•	 	 Employee solicitation and ambassador program, 

  

	 	•	 	 Feet-On-The-Street campaigns for residential and commercial customers, 

  

	 	•	 	 NPC’s Call Center Account Reps cross sell the Program, as time allows as determined by NPC 

  

	 	•	 	 NPC’s small commercial account reps and contractors to help support and cross sell the Program, as time allows as determined by NPC

  

	 	•	 	 Radio and Newspaper ads, 

  

	 	•	 	 NPC to strategically help cross promote the Program via its regular customer touches such as news letters, direct mail, brochures, online information and mass media
advertising, 

  

	 	•	 	 Participation in fairs, events and marketing events to promote the Program, 

  

	 	•	 	 Integrate Program information and signup process developed by Comverge at the NPC website, 

  

	 	•	 	 Banner Ads on the web - such as at Weather.com based on zip code entry, 

  

	 	•	 	 Outbound telemarketing may be used as a channel for selective and targeted recruiting subject to approval of telemarketing script from NPC,

  

 2A-1 
 PROPRIETARY AND CONFIDENTIAL 

	 	•	 	 HVAC’s Partnerships, 

  

	 	•	 	 Homebuilder outreach plans, and 

  

	 	•	 	 Co-marketing and other partnership marketing channels. 

  

	 	2.5	NPC shall pay incentives to Participants in accordance with ***. 

 3.0
Approaches to Various Sectors. Comverge’s marketing activities shall be focused on the market segments listed below. Comverge shall adhere to all communications guidelines, provided by NPC staff, including: branding guidelines, logo
usage, language, look and feel of marketing collateral, messaging guidelines and ensuring that marketing campaigns are executed upon receiving final approval from the NPC’s corporate marketing staff or designated officials providing approvals.

  

	 	3.1	Small Commercial Segment: 

  

	 	3.1.1	Primary contact method shall be Face-to-Face contact wherein, small commercial prospects shall be provided information about the Program and a sign-up brochure shall be provided
(FSI: Free Standing Insert). 

  

	 	3.1.2	Eligible customers interested in participating in the Program shall be able to sign-up by filling in the form or mailing it in subsequent to the face-to-face contact.

  

	 	3.1.3	Comverge may also send Direct Mail or contact small commercial customers via phone calls in order to set up appointments etc. 

  

	 	3.1.4	Comverge may also participate in trade shows to promote the Program and increase adoption by educating prospects about the efficacy of the program. 

  

	 	3.1.5	Targeting businesses with the Program offer and incorporating the Energy Efficiency discussion as part of the overall face-to-face touch plan increases the likely hood for the small
businesses to participate in the Program. 

  

	 	3.1.6	*** 

  

	 	3.2	Residential New Construction: 

  

	 	3.2.1	NPC has a strong relationship with residential builders and shall utilize this relationship to bring in new Participating Facilities into the Program. 

  

	 	3.2.2	Comverge, in collaboration with NPC, shall hold informational meetings with residential builders in the NPC footprint. The meetings shall include complete details of the program and
implications for the builders and the new home buyers. 

  

	 	3.2.3	Comverge shall develop a formal process to enroll builders interested in participating in the program. Builders shall be provided information about the Program via PowerPoint
presentations and or brochures. 

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential
treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 2A-2 
 PROPRIETARY AND CONFIDENTIAL 

	 	3.2.4	Comverge may also send Direct Mail or contact builders via phone calls in order to educate the builder prospects about the program and set up follow-up appointments.

  

	 	3.2.5	Comverge shall develop the following for the NPC website: information about the Program, including online sign-up process; energy saving tips; and FAQ’s for Residential New
Construction Segment. 

  

	 	3.2.6	*** 

  

	 	3.2.7	Comverge shall work with respective builders in order to ensure that new home buyers are educated about the program. As part of the Program information package, new home owners
shall receive information about the program including FAQ’s and opt-out option details. *** 

  

	 	3.3	Existing Residential Customer Base: 

  

	 	3.3.1	Comverge shall develop direct mail, bill inserts and other marketing collateral for the residential customer base. 

  

	 	3.3.2	Based on the relative success in penetrating the residential segment, frequency of direct mail campaigns and bill inserts to the existing residential customer base shall be
moderated to ensure achievement of annual customer acquisition targets. 

  

	 	3.3.3	Comverge may also leverage the HVAC community in order to educate them on the Program so that they become proponents of the Program to their end customers. Additionally, Comverge
may leverage the HVAC community and their customer list to recruit participants in the load control program. 

  

	 	3.3.4	Comverge may also participate in local events or trade shows in order to educate and enroll prospects in the Program. 

  

	 	3.3.5	Multi-Dwelling Units (“MDU”) may also be recruited and Comverge personnel shall work with owners of the MDU complexes in order to recruit qualified MDU’s to
participate in the program. 

  

	 	3.3.6	Comverge shall develop the following for the NPC website: information about the Program, including an online sign-up process; energy saving tips; and FAQ’s for the residential
customers. 

  

	 	3.3.7	***. 

 *** Portions of this agreement marked by *** have been omitted
pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 2A-3 
 PROPRIETARY AND CONFIDENTIAL 

 4.0 Comverge Responsibilities/Call Center. 
  

	 	4.1	Upon receipt from NPC of the customer list, commence execution of the Marketing Plan and the recruiting of Prospects. Comverge retains the right to decline certain Prospects based
solely on objective circumstances that prevent customer participation such as faulty or dangerous customer equipment, unsafe working conditions for Comverge employees or low curtailment signal strength or objective criteria regarding load value,
such as loads that are not coincident with NPC’s summer peak. 

  

	 	4.2	Mail an initial education package to potential Prospects. The package shall include information that describes how the specific features of the Program shall work. The package
information shall be professionally printed and may include direct mail letters, brochures and free standing inserts. 

  

	 	4.3	Be responsible for costs associated with a direct mail campaign, including printing and mailing of marketing collateral for the first two (2) iterations of a marketing piece.
Additional changes to marketing pieces can be provided at NPC’s expense. In addition to direct mail, Comverge may conduct marketing outreach activities to organizations such as trade associations, Chambers of Commerce and local publications.

  

	 	4.4	Develop a Participant Enrollment Form and an on-line enrollment process. Comverge shall be responsible for enrolling eligible participants in the Program. In the case that a
property is rented, the landlord or tenant may approve the installation of the device, by completing the enrollment instructions. Once a domicile or commercial building is enrolled in the Program, it is assumed that the location continues to be
enrolled in the Program unless the device is requested to be removed. In the event that someone moves from the domicile or commercial property, Comverge shall notify the new occupant about the device and provide them the opportunity to leave the
Program. 

  

	 	4.5	Develop a NPC branded website which shall include a comprehensive on-line customer education and enrollment process. 

  

	 	4.6	Maintain the customer call center to receive and respond to Participant inquiries. Comverge shall work with NPC and provide example scripting for the call center agents. NPC shall
have the opportunity to comment on and approve the scripts, and such comments or approval shall be provided within fifteen (15) Business Days of receipt of the final copy. Comverge shall work with NPC to identify linkages necessary between call
centers. Comverge shall set up a system to monitor and report to NPC on a regular basis and shall perform commercial reasonable efforts to perform the following call center performance metrics. 

  

 2A-4 
 PROPRIETARY AND CONFIDENTIAL 

	 	4.7	Operate the customer call center from 8:00 a.m. until 6:00 p.m. Pacific Prevailing Time during the Control Season and 9:00 a.m. until 5:00 p.m. Pacific Prevailing Time during
non-Control Season months, with an “on-call” HVAC service technician to handle emergency situations after hours. 

  

	 	4.8	Comverge shall collaborate with NPC in striving to innovate, improve and otherwise enhance the features and benefits of the Program. 

 5.0 Marketing Material Development Protocols. 
  

	 	5.1	Comverge shall manage all Program marketing-related deliverables, and ensure that all program materials, customer communications, forms, Web sites and other Program marketing
materials are consistent with NPC’s brand image, comply with NPC’s graphic standards, and use NPC-approved telephone numbers and Web addresses. 

  

	 	5.2	Comverge’s development of Program marketing materials shall be tracked using a production schedule and work break down structure that Comverge shall update and provide copies
to NPC on a weekly basis. 

  

	 	5.3	Upon initiation of each Program marketing project, *** 

  

	 	5.4	Comverge’s marketing team shall meet with NPC marketing personnel in person ***. 

  

	 	5.5	Comverge shall design NPC branded marketing collateral, according to NPC standards and subject to NPC approval, which shall be provided in accordance with Article 6 of this
Agreement. Such approval shall include, without limitation, NPC’s right to approve all uses of and references to its logos, trademarks and name. The detailed activities for this task shall include, but not be limited to:

  

	 	•	 	 Developing “Request for follow-up” leave-behind materials, 

  

	 	•	 	 Developing letter and fact sheet text; 

  

	 	•	 	 Developing layout for customer education package; 

  

	 	•	 	 Printing and delivering collateral 

  

	 	•	 	 Developing phone script and “Frequently Asked Questions” for customer contact personnel. 

  

	 	5.6	Comverge shall not distribute NPC branded materials without NPC’s final review and approval and from the utility. 

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has
been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 2A-5 
 PROPRIETARY AND CONFIDENTIAL 

	 	5.7	All Program marketing materials shall include NPC-approved branding and shall not include Comverge branding, unless agreed upon and approved by NPC. Comverge shall work under
complete compliance of NPC branding guidelines and requirements in all marketing-related work, content development and mix execution, unless otherwise agreed upon by NPC. 

  

	 	5.8	*** 

 6.0 NPC Marketing Responsibilities. NPC shall perform its
obligations in accordance with the approved Marketing Plan. 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for
confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 2A-6 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 2B 
 LOAD CONTROL EQUIPMENT, INSTALLATION, 
 AND MAINTENANCE SCOPE OF WORK 

 

	1.0	Scope of Work. Upon receipt of a signed Participant enrollment form, Comverge is obligated to install all equipment and other components, including the Load Control
Device(s), and perform all other necessary activities for the DLCS to control each Participating Facility’s End-use Load(s). 

  

	2.0	Installations. The Parties agree that Comverge shall install *** during Program Year 1. The Parties shall meet after PY1 to discuss *** for Program Years 2 and 3 and shall
make equitable adjustments ***, as the Parties may, but are under no obligation to, mutually agree. 

  

	3.0	Installation. So as to insure an orderly transition, NPC shall continue to pay its current vendor, QCS, for thirty (30) days following the Start Date. For any
Participating Facility installation, Comverge shall: 

  

	 	3.1	Inspect and make minor repairs to the air conditioning units at no charge in order to meet electrical code before devices can be installed. 

  

	 	3.2	Perform a communications check using test equipment supplied by Carrier to ensure that adequate 2-way communication is available and reliable. 

  

	 	3.3	If 2-way coverage is not available or reliable, or other Market Conditions prevent installation, the installer shall check 1-way VHF coverage. If this coverage is available, the
installer shall proceed with a 1-way Comverge thermostat installation. 

  

	 	3.4	Use commercially best efforts to install *** at any new construction Residential Participating Facility; 

  

	 	3.5	Install *** at any Commercial Participating Facility; 

  

	 	3.6	Install all devices and necessary components as required by this Agreement. 

  

	 	3.7	Provide and apply a label on each device indicating the component and a number to call for customer service and support. 

  

	 	3.8	Record a serial number from each Load Control Device installed by removing the “bar-code label” from the front of the device and attaching the label to the work-order.

  

	 	3.9	Provide work order copies for each installed device on a monthly basis (if requested) as part of Program documentation. 

  

	 	3.10	Mount the thermostat to replace the existing customer-owned thermostat using the existing thermostat wires. 

  

	 	3.11	Mount the communication piece of the 2-way thermostat in the vicinity of the air handler, in a location that provides convenient wiring and adequate 

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has
been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 2B-1 
 PROPRIETARY AND CONFIDENTIAL 

	 	 
communications to the paging network. If the wiring, or other conditions, do not allow for this mounting, the installer shall install a 1-way Comverge
thermostat. 

  

	 	3.12	Bag the replaced thermostat and instruct the Participant to store it, in case they decide to drop out of the Program for any reason. 

  

	 	3.13	Make equipment installations in such a manner as to minimize alterations to the current structure. 

  

	 	3.14	Installation of conduit, junction boxes, and connectors shall comply with applicable building codes and the National Electric Code. 

  

	 	3.15	Verify that the air conditioning and thermostat units function correctly in all operating modes. 

  

	 	3.16	Installation Personnel Recruitment. Comverge shall recruit all local personnel and subcontractors required as installers and inspectors to have sufficient personnel at all times to
track Participants signing up and to install according to the proposed installation schedule. 

  

	 	3.17	Installation Training. 

  

	 	3.17.1	Comverge shall provide a comprehensive training and testing program that ensures that each installer knows both the technical and customer service aspects of the job.

  

	 	3.17.2	If installation defect trends develop, Comverge’s project manager shall take corrective actions including additional training, increasing the number of random audits for that
installer, or releasing the installer from the project. 

  

	 	3.17.3	Comverge’s technicians shall not only be trained in the technical side of the installation, but shall also be trained and equipped for customer service.

  

	4.0	Maintenance and Site clean up. Comverge is obligated to maintain the DLCS equipment and other components, including the Load Control Equipment, and perform all other
necessary activities, including those set forth in Section 8.3, to ensure the continued operation of the DLCS and the EDLCS throughout the Term, in accordance with this Agreement. If, as a result of such maintenance or service performed,
Comverge concludes that the problem results from a DLCS failure, and that the use of the DLCS is materially affected thereby; then Comverge shall immediately commence correction procedures at no additional cost to NPC. 

  

	 	4.1	Monitoring and Testing. Comverge shall be responsible for routine monitoring of device reports from missed pages or missed heartbeat messages. These tests shall be used to
verify operation of the communication network and the thermostats. 

  

	 	4.2	Reporting. Comverge shall provide monthly customer contact logs and monthly customer participation reports as requested by NPC. Customer participation reports shall include
program enrollment activity, repairs, customer complaints and resolution and such other data as NPC may reasonably request. 

  

 2B-2 
 PROPRIETARY AND CONFIDENTIAL 

	 	4.3	Site Clean Up. Comverge shall collect and responsibly dispose of any trimmed wire clippings, unused screws or brackets, hazardous materials and any other material waste that
may result from the installation of the Load Control Devices. 

  

	 	4.4	Installation workmanship, codes and licensing. 

  

	 	4.4.1	Comverge or its subcontractors shall become a registered HVAC contracting firm in Nevada or acquire the necessary licenses. 

  

	 	4.4.2	Comverge shall perform all installations in a professional, workmanlike manner according to the National Electric Code. 

  

	 	4.4.3	Comverge shall respond to all governmental authorities, including the PUCN, as requested by NPC, that are requesting information about the Program, respond to their concerns with
meetings and written explanations of the Program, the equipment and installation techniques. 

  

	 	4.4.4	NPC or their subcontractors shall perform all installation of any ancillary monitoring equipment in a workmanlike manner according to the NEC. 

  

	 	4.4.5	Neither NPC, nor Comverge, nor their respective subcontractors shall disable, interfere, or alter the installation of the other Parties’ equipment unless the party believes
that the installation is a danger to the occupants of the domicile. Any alteration shall be brought to the other Party’s attention within twenty-four (24) hours. 

  

	5.0	Testing 

  

	 	5.1	Device and Network Monitoring. The Carrier 2-way devices report back that they’ve received a message, hence the network is monitored and endpoint verification is
achieved. For 1-way devices, Comverge shall sample a subset of the endpoints to verify network operation and end-device performance. The test points shall be connected directly to the Comverge LMS software via the cellular network, such that
performance verification is instantaneous. 

  

	 	5.2	Software Systems. The LMS Software backend utilizes a redundant topology, so that automatic failure can occur. Comverge shall work with NPC to improve the existing Carrier
system. 

  

	6.0	Systems Dispatch. NPC shall be able to Dispatch the DLCS and EDLCS, which includes without limitation operation of the LMS Software. Comverge shall enable the LMS Software
and load management control center to automatically control the Carrier Load Control Devices. Comverge shall maintain the system and be responsible for programming the load management control center to control the End-use Loads by system, region,
substation or circuit. NPC shall provide Comverge with an electronic file of the nodal addresses so that Comverge can program the devices. 

  

	 	6.1	 Dispatch Failure. Comverge shall work with NPC to improve their existing Carrier system. As NPC is the customer of record for the existing Carrier 

  

 2B-3 
 PROPRIETARY AND CONFIDENTIAL 

	 	 
System, NPC shall be responsible to ensure that these systems are made to be operational in the case of a failure. NPC shall work with Comverge when
necessary to make reasonably requested changes or periodic software upgrades to the software system. Comverge shall make commercially reasonable efforts to augment the Carrier software system to mitigate risk associated with this hosted solution.

  

	7.0	Project/ Program Staffing and Implementation. 

  

	 	7.1	Comverge shall assign a dedicated Program Manger who shall act as a single point of contact to ensure that all contract deliverables are met and that client satisfaction is
realized. The Program Manager and several additional team members shall be located in NPC offices. 

  

	 	7.2	Comverge shall hire a locally based Program Manager as soon as possible after the Start Date. 

  

	 	7.3	NPC shall: 

  

	 	•	 	 identify a NPC Program Manager within 15 Days of the Start Date 

  

	 	•	 	 provide office space, for two (2) co-located Comverge employees including phone, network access, office furniture, and office facilities.

  

 2B-4 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 2C 
 EXISTING DEMAND RESPONSE SYSTEM OPERATION 
  

	1.0	Background. 

 The EDLCS consists of direct load
control switches supplied by Cannon, Corporate Systems, 1-way thermostats from Cannon and 2-way Carrier thermostats. The aggregate load supplied by these devices is estimated by NPC to be between ***. 
  

	2.0	EDLCS Baseline 

 2.1 During the course of the first
Program Year, Comverge shall statistically survey the population of existing third-party EDLCS devices by on site inspections. The survey shall be conducted to obtain an estimate of the number of functioning devices of each technology ***. A random
sample with alternates shall be selected for each technology to account for sites an inspector may not easily access. 
 2.2 If the estimated
percentage of functional devices indicates that more than *** of sites need to be visited to attain an estimate with *** precision level, the study shall be limited to visits of *** of the technology population and the precision level for that
sampling shall be accepted. 
 2.3 *** 
  

	3.0	Comverge Responsibilities 

 3.1 Comverge shall work
with NPC and its M&V Vendor to obtain the EDLCS Baseline within Program Year 1 pursuant to Section 2.0 herein. 
 3.2 Comverge shall
provide all necessary support to assure the EDLCS program continues to consistently and verifiably provide the EDLCS Baseline of Demand Reduction, including replacing failed or damaged equipment, and maintaining system infrastructure. 
 3.3. During Program Year 1, Comverge shall assess the suitability of the EDLCS for conformance with WECC requirements for a non-spinning reserve
operating and shall perform any actions that may be required to bring the EDLCS into conformance with WECC requirements for a non-spinning reserve. 
 3.4. After determining the proper EDLCS Baseline, Comverge shall inspect at least *** of EDLCS Load Control Devices each year. The inspections shall ensure that Load Control Devices are operational and have the ability to control EDLCS
End-use Loads. If the inspection reveals that the Load Control Device is not operating or is disconnected, Comverge shall restore the equipment to commercial operation immediately, at no cost to NPC. 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has
been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 2C-1 
 PROPRIETARY AND CONFIDENTIAL 

	4.0	NPC Responsibilities 

 4.1 NPC shall provide on a
timely basis all documentation and information, as reasonably requested by Comverge, related to the EDLCS. 
 4.2 NPC shall use commercially
reasonable efforts to obtain any necessary authorizations for Comverge to utilize, fix, repair, and investigate all necessary software and hardware related to the EDLCS. 
 4.3 *** 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment.
Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 2C-2 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 2D 
 NOTICES 
  

			
	 If to Comverge:
	  	Comverge, Inc.
		  	120 Eagle Rock Avenue, Suite 190
		  	East Hanover, NJ 07936
		  	Attention: Frank Evans
		  	Fax: (973) 884-3503
		
	 If to NPC:
	  	Nevada Power Company
		  	6226 West Sahara Avenue - M/S 29
		  	Las Vegas, Nevada 89146
		  	Attention: Michael Brown
		  	Fax: (702) 367-5452

  

 2D-1 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 2E 
 INSURANCE 
  
  

			
	 Type of Insurance
	  	 Minimum Limits of Coverage

	 1. Commercial General Liability
	  	$2,000,000 each occurrence and in the aggregate
	
	CGL insurance shall cover liability arising from premises, operations, independent contractors, products/completed operations, contracts, property damage, personal injury and
advertising injury, and liability assumed under an insured contract (including the tort liability of another assumed in a business contract), all with limits as specified above. There shall be no endorsement or modification of the insurance limiting
the scope of coverage for liability arising from explosion, collapse, or underground property damage.
		
	 2. Business Automobile Liability
	  	$1,000,000 combined single limit (each accident), including all Owned, Non-Owned, Hired and Leased Autos
	
	 3. Workers Compensation, including statutory requirements.

		
	 4. Employers Liability
	  	$1,000,000 each accident for bodily injury by accident, or $1,000,000 each employee for bodily injury by disease.

 5. “Umbrella or Excess Liability” insurance with a limit per occurrence and in the aggregate of Five
Million ($5,000,000). 
 Comverge shall ensure that the insurance policies required above provide: 
  

	 	(i)	Insurance required in 1, 2 and 5 above shall include NPC, and its officers, directors, employees and agents as additional insureds. 

  

	 	(ii)	Such insurance as afforded by this policy for the benefit of NPC, shall be primary as respects any claims, losses, damages, expenses, or liabilities arising out of this Agreement,
and insured hereunder, and any insurance or self insurance carried by NPC, shall be excess of and noncontributing with insurance afforded by this policy. 

  

	 	(iii)	Such insurance may not be canceled, non-renewed or materially changed without the insurer giving thirty (30) days’ prior written notice to NPC or ten (10) days’
prior written notice in the event of non-payment. 

  

 2E-1 
 PROPRIETARY AND CONFIDENTIAL 

	 	(iv)	Such insurance shall provide NPC with waivers of subrogation. 

  

	 	(v)	The commercial umbrella liability policy shall provide coverage excess of, and shall drop down in the event the underlying CGL, Business Automobile Liability, and Employers
Liability insurance policy limits are exhausted due to claims during the policy term. 

  

 2E-2 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 2F 
 SOFTWARE 
 The Parties hereby agree as follows: 
  

	1.	SOFTWARE LICENSE AND TERMS 

 1.2 License
Grant: It is generally contemplated that all LMS Software, including, without limitation, field applications, or other proprietary licensed products, utilized and/or necessary for the performance of and receipt of Demand Reduction from Comverge
Load Control Devices (collectively, the “Software”) shall be used by and run on the hardware systems owned by Comverge and/or NPC. All descriptions of the Software, reports generated by the Software, or additional Software related
documents are collectively referred herein as “Software Documentation”. Comverge grants NPC a license to Use the Software and Software Documentation in accordance with Section 10.3. 
 1.2 Use Restrictions: The term “Use” solely means restricted internet access to the Software’s web based connection by specific SDO
only for the purpose of Dispatch. NPC hereby understands and agrees that (a) NPC shall have no right to copy the Software or any Software Documentation, except as permitted under the Agreement; (b) notwithstanding the foregoing, NPC is
authorized to make a reasonable number of copies of documentation for the Software as is necessary for NPC’s use of the Software pursuant to the terms of this Agreement; (c) NPC may not modify the Software or merge the same into software
that is not provided by Comverge without the prior written consent of Comverge; (d) NPC shall prevent unauthorized use or unauthorized access to Software, and (e) NPC shall only use the Software as provided for in this Agreement.

  

	2.	MAINTENANCE 

 2.1 Comverge shall maintain the
Software. Comverge shall provide such repair services and replacement parts as are necessary to keep the Software operating in accordance with the requirements of this Agreement during the operational period as defined in the this Agreement, at no
additional cost to NPC. 
 2.2 If, as a result of maintenance or service performed pursuant to this Section, Comverge concludes that the
problem results from a Software or system failure, and that the system’s use is materially affected thereby, then Comverge shall immediately commence correction procedures on such Software, at no additional cost to NPC. 
  

	3.	SYSTEM FLAWS 

 3.1 Comverge shall correct any
nonconformities of the Software to the requirements of this Agreement (“System Flaws”) and any revisions to the Software which are reported to Comverge by NPC. 
  

 2F-1 
 PROPRIETARY AND CONFIDENTIAL 

	4.	TRAINING 

 Training sessions shall be
conducted and shall include hands-on training utilizing trainers describing and demonstrating function, activation and application of the DLCS. Two (2) training sessions shall be conducted, one each in April and May of each Program Year.

  

	5.	NPC RULES 

 5.1 Comverge, when on NPC
property, shall conduct its operations in strict observation of access routes, entrance gates or doors, parking and temporary storage areas as designated by NPC. Under no circumstances shall any of Comverge’s personnel, vehicles or equipment
enter, move or be stored upon any area not authorized by NPC. 
 5.2 Comverge shall abide by all NPC security procedures, rules and
regulations, and cooperate with NPC Security personnel whenever on NPC premises, as provided by NPC prior to or upon arrival for such visit to the premises. 
  

	6.	OWNERSHIP OF INTELLECTUAL PROPERTY; CONFIDENTIALITY 

 6.1 As the owner of the Software, Comverge shall retain all rights to intellectual property thereof. 
 6.2 NPC acknowledges and
agrees that Comverge owns all proprietary rights, including patent, copyright, trade secret, trademark and other such proprietary rights, in and to the Software and Software Documentation and any corrections, remedial modifications, maintenance
upgrades, updates or the other modifications, including custom modifications to the Software whether made by Comverge, NPC or any third party. 
 6.3 Except as permitted pursuant to this Agreement or in writing by Comverge, NPC hereby acknowledges and agrees that: (a) the Software, the Software Documentation, access rights to the Software, and all related documents and all
copies thereof are Comverge’s exclusive property and constitute a valuable TRADE SECRET of Comverge (“Proprietary Information”), which NPC may not disclose or make available to third parties without being previously approved in
writing by Comverge; (b) NPC shall hold the Proprietary Information, including, without limitation, any methods or concepts utilized therein, in strict confidence for the sole benefit of Comverge; (c) NPC shall not reproduce, copy or
modify the Proprietary Information in whole or in part, except as authorized by Comverge in writing; (d) NPC hereby agrees that, during the Term of this Agreement and at all times thereafter, NPC and its employees shall maintain the
confidentiality of the Proprietary Information, and NPC shall not sell, license, publish, display, distribute, disclose or otherwise make the Proprietary Information available to any third party or attempt to (or allow any third-party to attempt to)
reverse engineer, decompile or disassemble or otherwise attempt to derive the source code for the operation of the Proprietary Information, or to decode, de-encrypt, decrypt or engineer around any measures contained in the Proprietary Information;
(e) NPC shall not alter in any way the database schema without the expressed written consent of Comverge; (f) NPC shall issue adequate instructions to all persons, 

  

 2F-2 
 PROPRIETARY AND CONFIDENTIAL 

 
and take all actions reasonably necessary to satisfy NPC’s obligations under this Section 6.3; (g) any use or disclosure of the Proprietary
Information in violation of this Section 6.3 may seriously and irreparably impair and damage Comverge’s business; and (h) upon any termination or cancellation of the Agreement, NPC shall, if requested by Comverge, forthwith return to
Comverge, or with Comverge’s written consent destroy, any access rights, passwords, magnetic tape, disc, semiconductor device or other memory device or system and/or documentation or other material including, but not limited to, all printed
material furnished by Comverge to NPC. 
  

 2F-3 
 PROPRIETARY AND CONFIDENTIAL 

 Software Scope of Work 
  

	1.0	Introduction 

 This Scope of Work describes the Software and
the practices and guidelines that both Parties shall use to carry out their respective responsibilities according to this Attachment 2F. 
 Comverge shall
supply the Software and provide access to NPC via the web using a standard web browser. Accessing the Software does not require the use of Comverge software or equipment. 
 As owner of the Software, Comverge may, at its sole discretion, change the architecture to ensure a more robust, stable or secure network environment, or create improvements to the website architecture to provide more
enhanced services to NPC. 
  

	2.0	Responsibilities 

 2.1 Comverge
Responsibilities: Comverge shall, in accordance with Good Industry Practice, design, deploy, operate, manage, and maintain the DLCS. 
 2.1.1
Comverge shall be responsible for configuring and programming the Software to be able to control specific appliances by system, by region, by substation or by circuit according to the parameters established by NPC. 
 2.1.2 Comverge shall provide NPC access to the Software through a web-based application interface over the Internet between NPC’s System Operations
Center and the Comverge facility. Alternatively, Comverge shall activate the system as directed by NPC though a telephone call, fax, or e-mail. 
 2.1.3 Comverge shall create logon id’s and initial passwords for personnel designated by NPC to have access to the Software. Comverge shall send these to the appropriate NPC personnel via the mail. 
 2.1.4 Comverge shall provide password resets to authorized NPC personnel following a two (2) step verification process. 
 2.2 NPC Responsibilities: This section defines the responsibilities that NPC has regarding the design, implementation, and ongoing support of the
Software. 
 2.2.1 NPC shall provide to Comverge the customer data required for Comverge to establish and maintain current and accurate
information to be used by the Software. 
 2.2.2 NPC shall determine the scheduling, groups, and activation of the Software in dispatching
test and Dispatch Events. 
 2.2.3 SDOs shall have the right to determine the Dispatch control of the Participating Facilities according to
the operating parameters defined by the Dispatch Event set forth in this Agreement. 
 2.2.4 SDOs shall be responsible for Dispatch of the
DLCS and EDLCS 
  

 2F-4 
 PROPRIETARY AND CONFIDENTIAL 

 2.2.5 NPC shall provide Personal Computers with internet connectivity and Microsoft Internet Explorer
(v.5.5 or above) at their system operations center to enable users to log into the LMS Software via the web interface. 
 2.2.6 NPC shall
notify Comverge who should have access to the Software. Any Dispatch Event scheduled by NPC personnel with a valid logon id and password shall be considered a valid Dispatch Event. 
 2.2.7 NPC shall promptly notify Comverge in writing of personnel who should no longer have access to the LMS Software, and Comverge shall work to promptly
ensure that access is no longer allowed by those users. 
  

	3.0	System Description 

 NPC shall have access to the LMS
Software. 
 The LMS Software shall include Comverge’s LMS Server and networking equipment, and third party software. 
 LMS Hardware 
  

	 	a.	LMS Servers – Two (Primary and Secondary) 

  

	 	b.	Rack-mounted Dell PowerEdge servers for scalable expansion. 

  

	 	c.	Disks in RAID mode for fault tolerance and high availability 

 LMS
Software 
  

	 	 a.
	 Comverge’s LMS (LMS) Software – Visual Basic, Microsoft Jet DB Engine 

  

	 	b.	Comverge LMS Web Interface – Apache/Tomcat on Microsoft SQL Server 

  

	4.0	Web Interface 

 4.1 Help Feature. Help
may be accessed by clicking on the Customer Service button near the bottom of the main LMS screen. 
 4.2 Logging into Web Control
Application . Users log into the LMS Software via a secure Web interface. Comverge initially creates usernames and pre-expired passwords for an authorized list of NPC users. Users will be forced to change their password upon first login.
Passwords will have a 90-day expiration cycle. 
 4.3 Creating a Load Control Schedule. NPC shall have the ability to create a demand
response schedule, using the LMS web interface. 
 4.4 Scheduling Dispatch Events. Once a schedule has been created, NPC may then
submit that schedule to the Software to be activated as a Dispatch Event. Within *** the system shall process the schedule and updated system status shall be available. 
 4.5 Dispatching Dispatch Events. Once a Dispatch Event has been scheduled by NPC the Software shall execute the Dispatch Event by dispatching control commands via the RF network to 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has
been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 2F-5 
 PROPRIETARY AND CONFIDENTIAL 

 
all Comverge Load Control Devices. Once the Software issues the Dispatch Event all Comverge End-use Loads shall be controlled within ***. 
 The Status field shows the current status of each scheduled event, which can be any of the following: 
  

			
	 Status
	  	 Description

		
	 Inactive
	  	No schedule submitted
		
	 Pending
	  	Schedule was submitted, but load control has not begun
		
	 Executing
	  	The system is under load control as specified in the schedule
		
	 Done
	  	The system finished executing the load control schedule
		
	 Restoring
	  	After executing the schedule, the system is updating the database
		
	 Error
	  	There was error in processing this schedule

  

	5.0	Security  

 5.1 Physical Security.
Comverge has controls in place to provide reasonable assurance that physical security over its Software and related computer and network files, programs, and data is restricted to authorized individuals. Servers and network equipment hosting NPC
data shall be located in a locked cabinet in a class-1 data center. Key access to cabinet is restricted to Comverge approved personnel. Data center uses badge scans and biometric (fingerprint) identification to authorization / authentication.

 5.2 Network Security. Comverge shall work to ensure that incoming connections from the Software shall not compromise the overall
security posture of the NPC network perimeter. Steps include: 
  

	 	5.2.1	Data transfer between NPC and Comverge shall be at least 3DES 168 bit encryption using PGP. 

  

	 	5.2.2	Comverge SFTP servers sit behind the Comverge firewall. Access is authenticated using a public/private key pair generated on the server by Comverge. 

  

	 	5.2.3	Comverge shall use dedicated application servers in the Data Center to process data from NPC. 

  

	 	5.2.4	Comverge uses a Cisco PIX firewall with Intrusion Detection Monitoring and uses known best practices for firewall configuration. 

 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has
been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 2F-6 
 PROPRIETARY AND CONFIDENTIAL 

	 	5.2.5	Comverge shall provide any Secret keys used for encryption and/or authentication to the NPC IP Manager or a trusted third party approved by NPC. All encryption algorithms used in
the processing, transmission, or storage of NPC data shall be disclosed and approved by NPC’s information protection manager. 

 5.3 Network Redundancy. Comverge shall provide reasonable assurance that capacity thresholds are maintained above current network utilization and those operations can continue in the event of unplanned disruptions. Primary and
back-up server shall be hosted out of a hosting facility. The data center has network redundancy built in through multiple carriers. Comverge can host a third cold-backup server at a remote location which can be brought up in case of an emergency.

 5.4 Network Back-Up & Recovery. Comverge shall perform daily backups. Weekly backups shall be stored in an off-site secure
facility and verifiable by a trusted third party. 
  

	 	5.4.1	System configurations backed up on a regular basis and stored off-site. 

  

	 	5.4.2	The Comverge Software shall contain primary and secondary server. 

  

	 	5.4.3	Node configurations are kept consistent on both machines. 

  

	 	5.4.4	Secondary server is in warm-failover mode and can be brought up at any time. 

  

	6.0	*** 

 *** Portions of this agreement marked by *** have been
omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 2F-7 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 2G 
 REPORTING 
  

	1.0	Web-based Weekly Reporting. 

  

	 	1.1	Comverge shall transmit *** reports of Program performance data, using Internet enabled electronic transfer via standard FTP protocols and comma or tab delimited text files, to
enable NPC to update the Conservation Department’s utility data store and departmental dashboard. 

  

	 	1.2	Comverge shall submit the data elements specified in Attachment 3 to this Agreement. 

  

	 	1.3	Comverge and NPC personnel shall work collaboratively with the M&V Contractor to: (a) optimize and automate the collection of the data elements required in the weekly
Program reports; (b) format weekly program reports for ease of use by NPC; (c) help facilitate the most efficient generation and transmission of the weekly Program reports; and (d) resolve any data discrepancies within five
(5) Business Days of identification of any discrepancy. 

  

	2.0	Program Portal and Dashboard 

  

	 	2.1	Comverge shall maintain a Program portal and dashboard that display Program performance data on an Internet site controlled and maintained by Comverge. Designated NPC
representatives shall have login access to the Program portal and dashboard and access to Program data at any time. 

  

	 	2.2	Data represented on the Program portal and dashboard shall be updated weekly to represent Program performance in a manner that is as close to real time as possible.

  

	 	2.3	The Program portal and dashboard will be used to generate weekly reports of Program performance data to be transmitted to NPC as described in Section 1.0 above.

  

	3.0	Status Reporting. 

  

	 	3.1	Comverge shall provide regular Program status reports. Such status reports and the Program portal and dashboard will be used to monitor, track and provide Program performance data.

  

	 	3.2	Comverge’s Program status reports shall include: 

 *** Portions of
this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. ***

  

 2G-1 
 PROPRIETARY AND CONFIDENTIAL 

	 	•	 	 Monthly reports detailing monthly Program activities (including the number of Load Control Devices installed in the prior Program Month), upcoming Program schedules
(including the planned number of Load Control Devices to be installed in the next twelve (12) Billing Months), Program performance data and other metrics, and movement toward Program targets; 

  

	 	•	 	 Monthly customer participation reports, which shall include monthly customer contact logs, Program enrollment activity, DLCS and EDLCS repairs, customer complaints
and resolution and such other data as NPC may reasonably request from time-to-time; 

  

	 	•	 	 A comprehensive annual report in a format suitable for inclusion in NPC filings to the PUCN regarding annual Program performance; and 

 

	 	•	 	 Real-time Program dashboard updates or other electronic formats as requested by NPC. 

  

	 	3.3	Program performance data included in Comverge’s reports shall include such data as NPC may direct from time-to-time. 

  

	4.0	Regulatory Support. Comverge shall provide responses to PUCN data requests and program regulatory support as follows: 

  

	 	4.1	Comverge shall maintain ledgers and other records and supporting customer data that are readily available in the event of regulatory or NPC information requests. Beyond typical
Program management and reporting activities, Comverge shall provide NPC with specialized Program documents and reports, as may be requested by NPC from time-to-time in connection with PUCN filings. 

  

	 	4.2	Comverge shall provide regulatory support concerning the Program and its activities hereunder. Comverge senior personnel shall be available to appear and testify before the PUCN on
matters directly related to the Program and activities that Comverge is performing or has performed hereunder. 

  

	5.0	Program Staff. Comverge shall have personnel report to NPC’s Las Vegas office upon request of NPC. Comverge shall have its program manager available to attend each NPC
monthly department staff meeting. 

  

	6.0	Program Security. 

  

	 	6.1	Comverge and NPC’s Security Department shall work cooperatively regarding background checks for field personnel and any other Program personnel who interact with NPC’s
customers and/or the general public while representing the Program. 

  

 2G-2 
 PROPRIETARY AND CONFIDENTIAL 

	 	6.2	Comverge shall provide systems and checks to protect the Program integrity by providing secure protocols and access to a password protected data input platform.

  

 2G-3 
 PROPRIETARY AND CONFIDENTIAL 

 ATTACHMENT 3 
 ELECTRONIC DATA EXCHANGE FORMAT 
 Section I. Data Exchange Overview 
 Comverge shall upload data files via secured File Transfer Protocol (FTPS). An account will be setup for Comverge and Comverge will be given a username and password to
use with the NPC FTPS server. 
 The basic procedure is as follows: 
  

	1.	Comverge connects to the FTPS server and sends the username and password. 

  

	2.	The FTPS server validates the user name and password or denies access if they do not authenticate. 

  

	3.	Comverge uploads a data file to the FTPS server. 

  

	4.	The data service sends acknowledgement email to Comverge to confirm data file receipt. 

  

	5.	The data file submitted is then parsed, validated and data values inserted/updated in the M&V data store. 

  

	6.	The data service sends to Comverge and NPC program manager an email message notifying Tier1 data acceptance or rejection, including data error codes identified, if any.

 All data records received from Comverge will be stored in an intermediate data location pending Tier2 verification. 
 Figure 1: Data flow from Comverge’s database to the final M&V data store. 
 

 
 Section II. Data Transport Stages 
 From Figure 1, the three (3) labeled data exchanges are described below: 
  

	1.	Contractor ApplicationèM&V Data Processing Application 

  

 3-1 
 PROPRIETARY AND CONFIDENTIAL 

 *** 
 All Comverge files
submitted throughout the Program Year will be archived on the NPC server. The data store will keep an activity log identifying each file submitted and its associated receipt date. The activity log will provide NPC an audit trail for all Comverge
data file submissions. 
  

	2.	Intermediate Data Store è Data Verification 

 The data verification process will inspect the Comverge’s sent data files to ensure that the data is within expected parameters and data quality inspections. At this point, some basic data verification is
performed. Examples are verification of IDs (as in ensuring that a sent Project ID exists and that the Comverge has permissions to update/upload data for it), verification of data types, verification of dates (i.e. ensure the specified Project did
exist for the month and year specified), and data completeness (required fields are not blank). 
  

	3.	Data Verification è M&V Final Data Store 

 This process uploads qualified information into the M&V final data store. This process will update any information records previously submitted by Comverge. 
 Section III. Data Files Structure and Data Elements 
  

	1.	File Format 

 txt – Text file, tab separated values. All rows
separated by end-line (\n) character. 
  

	2.	File Naming Conventions 

 Files uploaded to the FTPS server should
conform to the following naming convention: 
 *** 
 *** Portions
of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission. ***

  

 3-2 
 PROPRIETARY AND CONFIDENTIAL 

	3.	Data File Types and Data Elements 

 Unique data file types
encapsulate key information about participating customers, premise characteristics, energy conservation measure data, and program performance tracking elements. 
 Table 1 outlines each file type and its data content description. Section V contains a listing of data requirements. 
 Prior to the Program
kick-off, NPC and the M&V Contractor will conduct sessions with Comverge to discuss protocol details, and coordinate testing/implementation of the electronic data exchange processes. 
 Table 1: Data File Types 
 *** 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has been requested has been filed separately with the
Securities and Exchange Commission. *** 
  

 3-3 
 PROPRIETARY AND CONFIDENTIAL 

	Section	IV. Data Files Structure and Data Elements 

 Comverge shall submit
electronic data file transfer updates of customer, premises, transaction and energy conservation measure data on a weekly basis. Submissions shall be delivered no later than ***. Comverge shall coordinate with the NPC program manager for the due
dates of the first and last weekly report. 
 Monthly status reports shall be submitted by Comverge every month (January through December) no later than five
business days after the end of the report month. 
 Comverge shall notify NPC and the M&V data service of any anticipated delay in reporting prior to the
due date for the file transfer. 
 Table 2 summarizes reporting frequency requirements for each data file submission. 
 Table 2: Data Reporting Frequency. 
 *** 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has
been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 3-4 
 PROPRIETARY AND CONFIDENTIAL 

 Section V. Data Files Structure and Data Elements 
  

	1.	Data Requirements Matrix 

 *** 
 *** Portions of this agreement marked by *** have been omitted pursuant to a request for confidential treatment. Omitted material for which confidential treatment has
been requested has been filed separately with the Securities and Exchange Commission. *** 
  

 3-5 
 PROPRIETARY AND CONFIDENTIALSecurities Purchase Agreement

 Exhibit 10.1 
 SECURITIES PURCHASE AGREEMENT 
 This Securities Purchase Agreement (this
“Agreement”) is dated as of August 13, 2007, between Active Power, Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and
assigns, a “Purchaser” and collectively the “Purchasers”). 
 WHEREAS, subject to the terms and conditions
set forth in this Agreement and pursuant to Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully described in this Agreement. 
 NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows: 
 ARTICLE I. 
 DEFINITIONS 
 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1: 
 “Action” shall have the meaning ascribed to such term in
Section 3.1(j). 
 “Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act. With respect to a Purchaser, any investment fund or managed account that is
managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser. 
 “Board of Directors” means the board of directors of the Company. 
 “Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law
or other governmental action to close. 
 “Closing” means the closing of the purchase and sale of the Shares
pursuant to Section 2.1. 
 “Closing Date” means the Trading Day when all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Shares have been
satisfied or waived. 
 “Commission” means the Securities and Exchange Commission. 
  

 1 

 “Common Stock” means the common stock of the Company, par value $0.001
per share, together with the associated Rights, and any other class of securities into which such securities may hereafter be reclassified or changed into. 
 “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. 
 “Company Counsel” means Andrews Kurth LLP, with offices located at 111 Congress Avenue, Suite 1700, Austin, TX 78701.

 “Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

 “Effective Date” means the date that the initial Registration Statement filed by the Company pursuant to
the Registration Rights Agreement is first declared effective by the Commission. 
 “Evaluation Date” shall
have the meaning ascribed to such term in Section 3.1(r). 
 “Exchange Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 
 “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees, officers, directors of the Company or others providing services to the Company pursuant to the Company’s 2000 Stock Incentive Plan, as amended (the “Stock
Incentive Plan”), or pursuant to any stock or option plan or agreement duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors
established for such purpose, (b) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement,
provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person which is, itself or through its subsidiaries, and in good faith judgment of the
Board of Directors, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities. 
 “FWS” means Feldman Weinstein & Smith LLP with offices located at 420 Lexington Avenue, Suite 2620, New York, New York 10170-0002. 
  

 2 

 “GAAP” shall have the meaning ascribed to such term in
Section 3.1(h). 
 “Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

 “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

 “Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c). 
 “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other
restriction. 
 “Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b). 
 “Material Permits” shall have the meaning ascribed to such term in
Section 3.1(m). 
 “Per Share Purchase Price” equals $1.40, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement. 
 “Permitted Lien” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance
with GAAP; (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent; (iii) any minor imperfection of title or similar Lien which individually or in
the aggregate with other such Liens does not materially impair the value of the property subject to such Lien or the use of such property in the conduct of the Company’s business; and (iv) a security interest in all the Company’s
properties’ assets given in favor of Silicon Valley Bank. 
 “Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 
 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal
investigation or partial proceeding, such as a deposition), whether commenced or threatened. 
 “Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8. 
 “Registration Rights
Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit A attached hereto. 
  

 3 

 “Registration Statement” means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares. 
 “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). 
 “Rights” shall mean the Company’s preferred share purchase rights pursuant to that certain Rights Agreement dated December 13, 2001, as amended or restated from time to time. 
 “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 
 “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h). 
 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 
 “Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement. 
 “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares
of Common Stock). 
 “Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for
Shares purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds. 
 “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable,
include any subsidiary of the Company formed or acquired after the date hereof. 
 “Trading Day” means a day
on which the New York Stock Exchange is open for trading. 
 “Trading Market” means the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange.

 “Transaction Documents” means this Agreement, the Registration Rights Agreement and any other documents or
agreements executed in connection with the transactions contemplated hereunder. 
  

 4 

 “Transfer Agent”
means American Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address of 6201 15th Avenue, 3rd Floor, Brooklyn, NY 11219 and a facsimile number of 718-921-8327, and any successor transfer agent of the Company. 
 ARTICLE II. 
 PURCHASE AND SALE 
 2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate number of 10,000,000 of Shares (equal to $14,000,000.00 divided by the Per Share
Purchase Price), in the individual amounts specified on each Purchaser’s signature page. Each Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately available funds equal to its Subscription Amount and the
Company shall deliver to each Purchaser its respective Shares, and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of FWS or such other location as the parties shall mutually agree. 
 2.2
Deliveries. 
 (a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each
Purchaser the following: 
 (i) this Agreement duly executed by the Company; 
 (ii) a legal opinion of Company Counsel, substantially in the form of Exhibit B attached hereto; 
 (iii) a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, a
certificate evidencing a number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser; 
 (iv) the Registration Rights Agreement duly executed by the Company; 
 (v) copies of good standing certificates for the Company and each Subsidiary as of a recent date and certificates of qualification as a
foreign corporation for the Company and each Subsidiary as of a recent date; and 
 (vi) a certificate from the Company’s
transfer agent as of a recent date certifying the number of shares of Common Stock outstanding. 
 (b) On or prior to the
Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following: 
 (i) this Agreement duly
executed by such Purchaser; 
  

 5 

 (ii) such Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company; and 
 (iii) the Registration Rights Agreement duly executed by such Purchaser.

 2.3 Closing Conditions. 
 (a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met: 
 (i) the accuracy when made and on the Closing Date of the representations and warranties of the Purchasers contained herein; 

(ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have
been performed; and 
 (iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 (b) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following
conditions being met: 
 (i) the accuracy when made and on the Closing Date of the representations and warranties of the
Company contained herein; 
 (ii) all obligations, covenants and agreements of the Company required to be performed at or
prior to the Closing Date shall have been performed; 
 (iii) the delivery by the Company of the items set forth in
Section 2.2(a) of this Agreement; 
 (iv) there shall have been no Material Adverse Effect with respect to the Company
since the date hereof; and 
 (v) from the date hereof to the Closing Date, trading in the Common Stock shall not have been
suspended by the Commission or the Company’s principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the
Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading
Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the Shares at the Closing. 
  

 6 

 ARTICLE III. 
 REPRESENTATIONS AND WARRANTIES 
 3.1 Representations and Warranties of the Company. Except as set
forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations and warranties to each Purchaser: 
 (a)
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a) of the Disclosure Schedules. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens other than Permitted Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. If the Company has no subsidiaries, then all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded. 
 (b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document,
(ii) a material adverse effect on the results of operations, assets, business, or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to
perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. 
 (c)
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and 

  

 7 

 
thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection therewith other than in connection with the Required Approvals. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with
the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. 
 (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Shares and the consummation by the Company of the other transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which
the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect. 
 (e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents,
other than (i) filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Registration Statement, (iii) application(s) to each applicable Trading Market for the listing of the Shares
for trading thereon in the time and manner required thereby, and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required
Approvals”). 
 (f) Issuance of the Shares. The Shares are duly authorized and, when issued and paid for in
accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.

  

 8 

 (g) Capitalization. The capitalization of the Company is as set forth on
Schedule 3.1(g) of the Disclosure Schedules, which Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company has not
issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options or issuance of restricted stock under the Company’s Stock Incentive Plan and pursuant
to the conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Shares, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Shares will not obligate the Company to issue shares of
Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Shares. Other than that certain
Second Amended and Restated Investors’ Right dated November 23, 1999 (filed as Exhibit 10.4 to the Company’s Registration Statement on Form S-1 with respect to its initial public offering), there are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. 
 (h) SEC Reports; Financial Statements. Other than the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2006 (the “2006 10-K”), which was not timely filed, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. Except to the extent corrected by subsequent SEC Reports or amendments to 

  

 9 

 
a prior SEC Report, including the restatement of certain prior year financial information as set forth in the 2006 10-K, as of their respective dates, the
SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As corrected and restated in the 2006 10-K, the financial statements of the
Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. As corrected and restated by the
2006 10-K, such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise
specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. 
 (i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed except as disclosed on Schedule 3.1(i) hereto, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company
has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance
of the Shares contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or
financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that
this representation is made. 
 (j) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory
authority 

  

 10 

 
(federal, state, county, local or foreign) (collectively, an “Action”) not already disclosed in the SEC Reports which (i) adversely
affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Shares or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.
Except as disclosed in the SEC Reports, there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the
Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 
 (k) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the
employees of the Company which could reasonably be expected to result in a Material Adverse Effect. No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer
does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating
to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 (l) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event
has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws
applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect. 
 (m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit. 
  

 11 

 (n) Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for
Permitted Liens. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance. 
 (o) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as
described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or
otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
 (p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost. 
 (q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of
the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees
for services rendered, (ii) reimbursement for expenses incurred on behalf 

  

 12 

 
of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company or the issuance of Common
Stock under the Company’s employee stock purchase plan. 
 (r) Sarbanes-Oxley; Internal Accounting Controls. The
Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed
periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of
the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the
Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. 
 (s) Certain Fees. Except for fees payable to RBC Capital Markets, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf
of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents. 
 (t) Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Shares hereunder does not contravene the rules and regulations of the
Trading Market. 
 (u) Investment Company. The Company is not, and is not an Affiliate of, and immediately after
receipt of payment for the Shares, will not be or be an Affiliate of, an 

  

 13 

 
“investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so
that it will not become subject to the Investment Company Act of 1940, as amended. 
 (v) Registration Rights. Other
than each of the Purchasers, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company. 
 (w) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and
maintenance requirements. 
 (x) Application of Takeover Protections. The Company and the Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Shares and the Purchasers’ ownership of the Shares. 
 (y) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public
information. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All disclosure furnished by or on behalf of the Company to the Purchasers
regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of
this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which
they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in
Section 3.2 hereof. 
  

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 (z) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers
to buy any security, under circumstances that would cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under
the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated. 
 (aa) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the
receipt by the Company of the proceeds from the sale of the Shares hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and
other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for at least the next 12 months, as now conducted and as proposed to
be conducted, including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof, and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no
knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(aa)
of the Disclosure Schedules sets forth as of the date thereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness” means (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness. 
 (bb) Tax Status. Except for matters that would not,
individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income 

  

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and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been
asserted or threatened against the Company or any Subsidiary. 
 (cc) No General Solicitation. Neither the Company nor
any person acting on behalf of the Company has offered or sold any of the Shares by any form of general solicitation or general advertising. The Company has offered the Shares for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act. 
 (dd) Foreign Corrupt Practices. Neither the
Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of
1977, as amended. 
 (ee) Accountants. The Company’s accounting firm is set forth on Schedule 3.1(ee) of
the Disclosure Schedule. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial
statements to be included in the Company’s Annual Report on Form 10-K for the year ending December 31, 2007. 
 (ff)
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the independent auditing firms and outside counsel formerly
or presently employed by the Company which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents, and the Company is current with respect to any fees owed to its independent auditing firm
and outside counsel. 
 (gg) Acknowledgment Regarding Purchasers’ Purchase of Shares. The Company acknowledges and
agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting
as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or
agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Shares. The Company further represents to each Purchaser that the Company’s decision to
enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. 
  

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 (hh) Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) and 4.12 hereof), it is understood and acknowledged by the Company (i) that none of the Purchasers have been asked by the Company to agree, nor has any
Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Shares for any specified term; (ii) that past or
future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded securities; (iii) that any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a
“short” position in the Common Stock; and (iv) that each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further
understands and acknowledges that (a) one or more Purchasers may engage in hedging activities at various times during the period that the Shares are outstanding, and (b) such hedging activities (if any) could reduce the value of the
existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents. 
 (ii) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its
behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares, (ii) sold, bid
for, purchased, or, paid any compensation for soliciting purchases of, any of the Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the
case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Shares. 
 (jj) U.S. Real Property Holding Corporation. The Company is not, nor has ever been, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon Purchaser’s request. 
 (kk) Off Balance Sheet Arrangements. There
is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed or that otherwise
would be reasonably likely to have a Material Adverse Effect. 
 (ll) Investment Company Status. The Company is not,
and upon consummation of the sale of the Securities will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal
underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended. 
  

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 3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows: 
 (a)
Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and
to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the
transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser,
and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. 
 (b) Own Account. Such Purchaser understands that the Shares are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not with a view to or for distributing or reselling such Shares or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such Shares (this representation and warranty not limiting such Purchaser’s right to sell the Shares pursuant to the Registration Statement or otherwise in compliance with applicable
federal and state securities laws) in violation of the Securities Act or any applicable state securities law. Such Purchaser is acquiring the Shares hereunder in the ordinary course of its business. 
 (c) Purchaser Status. At the time such Purchaser was offered the Shares, it was, and at the date hereof it is either: (i) an
“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
not required to be registered as a broker-dealer under Section 15 of the Exchange Act. 
 (d) Experience of Such
Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective
investment in the Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

  

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 (e) General Solicitation. Such Purchaser is not purchasing the Shares as a result
of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general
advertisement. 
 (f) Short Sales and Confidentiality Prior To The Date Hereof. Other than consummating the
transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the
securities of the Company during the period commencing from the time that such Purchaser was first contacted by the Company or any other Person representing the Company concerning the terms of the transactions contemplated hereunder until the date
hereof (“Discussion Time”). Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it
in connection with this transaction (including the existence and terms of this transaction). 
 ARTICLE IV. 
 OTHER AGREEMENTS OF THE PARTIES 
 4.1
Transfer Restrictions. The Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Shares other than pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of
transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement. 
 (a) The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Shares in the
following form: 
 THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE 

  

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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY
SUCH SECURITIES. 
 The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide
margin agreement with a registered broker-dealer or grant a security interest in some or all of the Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be
bound by the provisions of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Shares to the pledgees or secured parties. Such a pledge or transfer
would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer of the Shares, including, if the Shares are subject
to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder. 
 (b) Certificates evidencing the Shares shall not contain any legend (including
the legend set forth in Section 4.1(b)), (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Shares
pursuant to Rule 144, or (iii) if such Shares are eligible for sale under Rule 144(k), or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued
by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder. The Company agrees
that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a
certificate representing Shares, issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such Shares that is free from all
restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer 

  

 20 

 
Agent that enlarge the restrictions on transfer set forth in this Section. Certificates for Shares subject to legend removal hereunder shall be transmitted
by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. 
 (c) In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Shares (based on the volume weighted average price of the Common Stock on the date such Shares are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to
Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend.
Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Shares as required by the Transaction Documents, and such Purchaser shall have the right to
pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. 
 (d) Each Purchaser, severally and not jointly with the other Purchasers, agrees that such Purchaser will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if Shares are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the
restrictive legend from certificates representing Shares as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding. 
 4.2 Furnishing of Information. Until the earliest of the time that no Purchaser owns Shares, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act. As long as any Purchaser owns Shares, if the
Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Shares
under Rule 144. The Company further covenants that it will take such further action as any holder of Shares may reasonably request, to the extent required from time to time to enable such Person to sell such Shares without registration under the
Securities Act within the requirements of the exemption provided by Rule 144. 
 4.3 Integration. The Company shall not sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the sale of the Shares to the Purchasers or that would be integrated with the offer or sale of the Shares to the Purchasers for purposes of the rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 
  

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 4.4 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City time) on
the Trading Day immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and by the fourth Trading Day following the date hereof, file a Current Report on Form 8-K, filing
the Transaction Documents as exhibits thereto. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall
issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior
written consent of such Purchaser, except (i) as required by federal securities law in connection with (A) any registration statement contemplated by the Registration Rights Agreement and (B) the filing of final Transaction Documents
(including signature pages thereto) with the Commission and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (ii). 
 4.5 Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the
consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under the Rights or any other control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or
similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Shares under the Transaction Documents
or under any other agreement between the Company and the Purchasers. 
 4.6 Non-Public Information. Except with respect to the
material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any
information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. 
 4.7 Use
of Proceeds. Except as set forth on Schedule 4.7 of the Disclosure Schedules, the Company shall use the net proceeds from the sale of the Shares hereunder for working capital purposes and shall not use such proceeds for (a) the
satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) the redemption of any Common Stock or Common Stock Equivalents or
(c) the settlement of any outstanding litigation. 
  

 22 

 4.8 Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company
will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title
or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees
(and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of reasonable investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action
instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction
Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any
violations by the Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of
which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to
the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to
the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable
fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. 
 4.9 Listing of Common Stock. The
Company hereby agrees to use best efforts to maintain the listing of the Common Stock on a Trading Market, and as soon as reasonably practicable following the Closing (but not later than the earlier of the Effective Date and the first anniversary of
the Closing Date) to list all of the Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application all of the Shares, and will take
such other action as is necessary to cause all of the Shares to be listed on such other Trading Market as promptly as 

  

 23 

 
possible. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply
in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. 
 4.10
Equal Treatment of Purchasers. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all
of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the
Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Shares or otherwise. 
 4.11 Subsequent Equity Sales. 
 (a) From the date hereof until 90 days after the Effective Date, neither the Company nor any Subsidiary shall issue shares of Common Stock or Common Stock Equivalents; provided, however, the 90 day period set forth in this
Section 4.11 shall be extended for the number of Trading Days during such period in which (i) trading in the Common Stock is suspended by any Trading Market, or (ii) following the Effective Date, the Registration Statement is not
effective or the prospectus included in the Registration Statement may not be used by the Purchasers for the resale of the Shares. 
 (b) From the date hereof until the earlier of (i) two (2) years after the Effective Date or (ii) such time as the Purchaser’s collectively hold less than 10% of the Securities issued pursuant to this Agreement, the
Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent Financing involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company issues or sells
(i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is
based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to
being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or
(ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to any right to collect damages. 
 (c) Notwithstanding the
foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. 
  

 24 

 4.12 Short Sales and Confidentiality After The Date Hereof. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it have executed or will execute any Short Sales during the period commencing at the Discussion Time and ending
at the time that the transactions contemplated by this Agreement are first publicly announced as described in Section 4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the Company as described in Section 4.4, such Purchaser has maintained and will maintain the confidentiality of the existence and terms of this transaction and the
information included in the Disclosure Schedules. Each Purchaser severally and not jointly with any other Purchaser, understands and acknowledges, and agrees, to act in a manner that will not violate the positions of the Commission as set forth
in Item 65, Section A, of the Manual of Publicly Available Telephone Interpretations, dated July 1997, compiled by the Office of Chief Counsel, Division of Corporation Finance. Notwithstanding the foregoing, no Purchaser makes any
representation, warranty or covenant hereby that it will not engage in Short Sales in the securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced as described in
Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have
no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Shares covered by this Agreement. 
 4.13 Delivery of Shares After Closing.
The Company shall deliver, or cause to be delivered, the respective Shares purchased by each Purchaser to such Purchaser within 3 Trading Days of the Closing Date. 
 4.14 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The
Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws
of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser. 
 4.15 Capital
Changes. Until the one year anniversary of the Effective Date, the Company shall not undertake a reverse or forward stock split or reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority in
interest of the Shares. 
 4.16 Participation in Future Financing. From the date hereof until the date that is the 12 month
anniversary of the Effective Date, upon any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration (a “Subsequent Financing”), each Purchaser shall have the right to
participate in the Subsequent Financing up to an amount equal to 30% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing.
  

 25 

 (a) At least 5 Trading Days prior to the closing of the Subsequent Financing, the Company
shall deliver to each Purchaser a written notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser if it wants to review the details of such financing (such additional
notice, a “Subsequent Financing Notice”). Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than 1 Trading Day after such
request, deliver a Subsequent Financing Notice to such Purchaser. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and
the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.
 (b) Any Purchaser desiring to participate in such Subsequent Financing must provide
written notice to the Company by not later than 5:30 p.m. (New York City time) on the 5th Trading Day after all of the Purchasers have received the
Pre-Notice that the Purchaser is willing to participate in the Subsequent Financing, the amount of the Purchaser’s participation, and that the Purchaser has such funds ready, willing, and available for investment on the terms set forth in the
Subsequent Financing Notice. If the Company receives no notice from a Purchaser as of such 5th Trading Day, such Purchaser shall be deemed to have notified
the Company that it does not elect to participate.
 (c)
If by 5:30 p.m. (New York City time) on the 5th Trading Day after all of the Purchasers have received the Pre-Notice, notifications by the Purchasers of
their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such
Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.
 (d) If by 5:30 p.m. (New York City time) on the 5th Trading Day after all of the Purchasers have received the Pre-Notice, the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than
the aggregate amount of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” means the ratio of (x) the
Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating under this Section 4.12 and (y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers
participating under this Section 4.16. 
 (e) The Company must provide the Purchasers with a second Subsequent
Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 4.16, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms
set forth in such Subsequent Financing Notice within 60 Trading Days after the date of the initial Subsequent Financing Notice. 
  

 26 

 (f) Notwithstanding the foregoing, this Section 4.16 shall not apply in respect of
(i) an Exempt Issuance or (ii) an underwritten public offering of Common Stock. 
 ARTICLE V. 
 MISCELLANEOUS 
 5.1 Termination. This
Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the
Closing has not been consummated on or before August 14, 2007; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties). 
 5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement; provided, that the Company shall reimburse
Steelhead Investments Ltd. (or its designee(s)) for up to $5,000 for its reasonable legal fees and disbursements incurred in connection with the transactions contemplated by this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes
and other taxes and duties levied in connection with the delivery of any Shares to the Purchasers. 
 5.3 Entire Agreement. The
Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 
 5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the
date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after
the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day, (c) the 2nd Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 
 5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Purchasers of at least 67% of the Shares still held by the Purchasers or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect
to any provision, condition or requirement of this Agreement 

  

 27 

 
shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. 
 5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 
 5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger or otherwise by operation of law). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Shares,
provided such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions of the Transaction Documents that apply to the “Purchasers.” 
 5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8. 
 5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this
Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party
shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 
  

 28 

 5.10 Survival. The representations and warranties contained herein shall survive the Closing and
the delivery of the Shares. 
 5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” or “.tif” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile or “.pdf” or “.tif” signature page were an original thereof. 
 5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 
 5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from
time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights. 
 5.14 Replacement of Shares. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The
applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Shares. 
 5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in
the Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 
  

 29 

 5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any
Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy
law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred. 
 5.17 Independent Nature of Purchasers’ Obligations and
Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the
obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.
Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. For reasons of administrative convenience
only, Purchasers and their respective counsel have chosen to communicate with the Company through FWS. FWS does not represent all of the Purchasers but only RBC Capital Markets, who has acted as placement agent to the transaction. The Company has
elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers. 
 5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial
liquidated damages or other amounts are due and payable shall have been canceled. 
 5.19 Saturdays, Sundays, Holidays. If the last or
appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day. 
 5.20 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the 

  

 30 

 
normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of
the Transaction Documents or any amendments hereto. 
 5.21 Waiver of Jury Trial. In any action, suit or proceeding in any
jurisdiction brought by any party against any other party, the parties each knowingly and intentionally, to the greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably and expressly waives forever trial by jury.

 (Signature Pages Follow) 
  

 31 

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

					
	ACTIVE POWER, INC.	 	Address for Notice:
			
	By:	 	 /s/ Jim Clishem
	 	Active Power, Inc.
	 Name:
 Title:
	 	 Jim Clishem
 President and CEO
	 	 2128 W. Braker Lane, BK 12
 Austin, Texas
78758
 Attn: Chief Financial Officer

			
		 		 	 With a copy to (which shall not constitute notice):
  
 Andrews Kurth LLP
 111 Congress Avenue, Suite 1700
 Austin, Texas 78701
 Attn: J. Matthew Lyons

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGES FOR PURCHASERS FOLLOW] 
  

 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: SF Capital Partners Ltd. 
 Signature of Authorized Signatory of Purchaser: /s/ Brian H. Davidson 
 Name of Authorized Signatory: Brian H.
Davidson 
 Title of Authorized Signatory: Managing Director 
 Email Address of Purchaser: Bdavidson@sf.capital.com 
 Fax Number of Purchaser: 414-294-7700 
 Telephone Number of Purchaser: 414-294-7000 
  

			
	Address for Notice of Purchaser:	  	c/o Stark Offshore Management LLC
		  	3600 South Lake Drive
		  	St. Francis, WI 53235
	
	Address for Delivery of Shares for Purchaser (if not same as address for notice):
		
		  	M&I Wealth Management Investment Coordination Department
		  	Attention: Jamie Race
		  	11270 W. Park Place, Suite 400
		  	Milwaukee, WI 53224

 Subscription Amount: $1,540,000.00 
 Shares: 1,100,000 
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Southport Energy Alternatives Fund, L.P. 
 Signature of Authorized Signatory of Purchaser: /s/ Anthony Grammalva 
 Name of Authorized Signatory: Anthony
Grammalva 
 Title of Authorized Signatory: CEO Sound Energy Partners, Inc. Its Investment Manager 
 Email Address of Purchaser: SNegulic@secm.com 
 Fax Number of Purchaser:
203-254-4509 
 Telephone Number of Purchaser: 203-254-4500 
  

			
	Address for Notice of Purchaser:	  	c/o Sound Energy Partners, Inc.
		  	354 Pequot Ave.
		  	Southport, CT 06590
	
	Address for Delivery of Shares for Purchaser (if not same as address for notice):
		
		  	Morgan Stanley
		  	c/o Swaine Napier
		  	2000 Westchester Ave.
		  	Purchase, NY 10577

 Subscription Amount: $837,060 
 Shares: 597,900 
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Southport Energy Alternatives SPV Offshore Fund, Inc. 
 Signature of Authorized Signatory of Purchaser: /s/ Anthony Giammalva 
 Name of Authorized Signatory: Anthony Giammalva 
 Title of Authorized Signatory: CEO – Sound Energy Partners, Inc. – It’s Investment
Advisor 
 Email Address of Purchaser: SNegulic@secm.com 
 Fax
Number of Purchaser: 203-254-4509 
 Telephone Number of Purchaser: 203-254-4500 
  

			
	Address for Notice of Purchaser:	  	c/o Sound Energy Partners, Inc.
		  	354 Pequot Avenue
		  	Southport, CT 06890
	
	Address for Delivery of Shares for Purchaser (if not same as address for notice):
		
		  	Morgan Stanley
		  	c/o Swaine Napier
		  	2000 Westchester Avenue
		  	Purchase, NY 10577

 Subscription Amount: $633,220 
 Shares: 452,300 
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Southport Energy Alternatives SPV Fund, LP 
 Signature of Authorized Signatory of Purchaser: /s/ Anthony Giammalva 
 Name of Authorized Signatory: Anthony Giammalva 
 Title of Authorized Signatory: CEO Sound Energy Partners, Inc. Its Investment Manager 

Email Address of Purchaser: SNegulic@secm.com 
 Fax Number of Purchaser:
203-254-4509 
 Telephone Number of Purchaser: 203-254-4500 
  

			
	Address for Notice of Purchaser:	  	c/o Sound Energy Partners, Inc.
		  	354 Pequot Avenue
		  	Southport, CT 06890
	
	Address for Delivery of Shares for Purchaser (if not same as address for notice):
		
		  	Morgan Stanley
		  	c/o Swaine Napier
		  	2000 Westchester Avenue
		  	Purchase, NY 10577

 Subscription Amount: $979,720 
 Shares: 699,800 
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: UBS O’Connor LLC F/B/O: O’Connor Pipes Corporate Strategies Master Limited 
 Signature of Authorized Signatory of Purchaser: /s/ Andy Martin 
 Name of Authorized Signatory: Andy Martin 
 Title of Authorized Signatory: Executive Director 
 Email Address of Purchaser: DL-ubsoc-corpact@ubs.com 
 Fax Number of
Purchaser: 312-525-6271 
 Telephone Number of Purchaser: 312-525-5839 
  

			
	Address for Notice of Purchaser:	  	c/o UBS O’ Connor LLOC
		  	Attn: Rob Murray
		  	One North Wacker Drive, 32nd Floor
		  	Chicago, IL 60606
	
	Address for Delivery of Shares for Purchaser (if not same as address for notice):
		
		  	Same as above

 Subscription Amount: $770,000 
 Shares: 550,000 
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: RHO Management Trust IV 
 Signature of Authorized Signatory of Purchaser: /s/ Jeffrey I. Martin 
 Name of Authorized Signatory: Jeffrey I.
Martin 
 Title of Authorized Signatory: Attorney-in-fact 
 Email Address of Purchaser: JMARTIN@Rho.com 
 Fax Number of Purchaser: 212-751-3613 
 Telephone Number of Purchaser: 212-751-6677 
  

			
	Address for Notice of Purchaser:	  	152 West 57th Street, 23rd Floor
		  	New York, NY 10019
	
	Address for Delivery of Shares for Purchaser (if not same as address for notice):
		
		  	Same as above

 Subscription Amount: $840,000 
 Shares: 600,000 
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
  

	
	 Name of Purchaser: Steelhead Investments Ltd.

	
	 Signature of Authorized Signatory of Purchaser: /s/ J. Baker Gentry, Jr.

	
	 Name of Authorized Signatory: J. Baker Gentry, Jr.

	
	 Title of Authorized Signatory: Authorized Signatory

	
	 Email Address of Purchaser: legal@hbk.com

	
	 Fax Number of Purchaser: 214-758-1207

	
	 Telephone Number of Purchaser: 214-758-6107

	
	 Address for Notice of Purchaser: c/o HBK Services LLC

	
	                                        
               300 Crescent Court, Suite 700

	
	                                        
               Dallas, TX 75201

	
	 Address for Delivery of Shares for Purchaser (if not same as address for notice):

	
	                                        
                   Same as above.

	
	
	
	

  

	
	 Subscription Amount: $6,720,000

	
	 Shares: 4,800,000

 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
  

	
	 Name of Purchaser: Paperworld Environmental Opportunities Fund (Register Holder: Paperworld Environmental
Opportunities)

	
	 Signature of Authorized Signatory of Purchaser: /s/    Bruce
Jenkyn-Jones

	
	 Name of Authorized Signatory: Bruce Jenkyn-Jones

	
	 Title of Authorized Signatory: Director of Investments

	
	 Email Address of Purchaser: b.jenkyn-jones@impax.co.uk.

	
	 Fax Number of Purchaser: +44(0)2074371245

	
	 Telephone Number of Purchaser: +44(0)2074322612

	
	 Address for Notice of Purchaser: c/o Impax Asset Management LTD (Attn: Debbie Vanderkolk

	
	                                        
                   Broughton House, 6-8 Sackville Street

	
	                                        
                   London W1S 3DG, UK

	
	 Address for Delivery of Shares for Purchaser (if not same as address for notice):

	
	                                        
                   BNP Paribas Securities Services Luxembourg

	
	                                        
                   33, Rue de GASPERICH

	
	                                        
                   Howald-Hesperange

	
	                                        
                   L-2085 Luxembourg

  

	
	 Subscription Amount: $630,000.00

	
	 Shares: 450,000

 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
  

			
	 Name of Purchaser:  Impax Environmental Markets (Ireland) Fund (Registered Holder: RBC Dexia Investor Services
Bank)

	
	 Signature of Authorized Signatory of Purchaser:  /s/    Bruce
Jenkyn-Jones

	
	 Name of Authorized Signatory:  Bruce Jenkyn-Jones

	
	 Title of Authorized Signatory:  Director of Investments

	
	 Email Address of Purchaser:  b.jenkyn-jones@impax.co.uk.

	
	 Fax Number of Purchaser:  +44(0)2074371245

	
	 Telephone Number of Purchaser:  +44(0)2074322612

		
	 Address for Notice of Purchaser:
	 	   c/o Impax Asset Management LTD (Attn: Debbie Vanderkolk)

		
		 	   Broughton House, 6-8 Sackville Street

		
		 	   London W1S 3DG, UK

	
	 Address for Delivery of Shares for Purchaser (if not same as address for notice):

		
		 	   Brown Brothers Harriman

		
		 	   140 Broadway, Ground Floor

		
		 	   New York, NY 10006

		
		 	   Attn: Trade Processing Dept.

		
		 	   Ralph Firneno, For Deposit To Account 8050056

  

	
	 Subscription Amount: $560,000.00

	
	 Shares: 400,000

 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
  

	
	 Name of Purchaser: Impax Environmental Markets PLC (Registered Holder: Nortrust
Nominees
 Limited Account: IEM01)

	
	 Signature of Authorized Signatory of Purchaser: /s/ Bruce Jenkyn-Jones 

	
	 Name of Authorized Signatory: Bruce Jenkyn-Jones

	
	 Title of Authorized Signatory: Director of Investments

	
	 Email Address of Purchaser: b.jenkyn-jones@impax.co.uk.

	
	 Fax Number of Purchaser: +44(0)2074371245

	
	 Telephone Number of Purchaser: +44(0)2074322612

	
	 Address for Notice of Purchaser: c/o Cavendish Administration

	
	                                        
                   145-157 St Johns Street

	
	                                        
                   London EC1V 4RU, UK

	
	 Address for Delivery of Shares for Purchaser (if not same as address for notice):

	
	                                        
                   Same as above.

  

	
	 Subscription Amount: $490,000.00

	
	 Shares: 350,000

 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE]

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