Document:

<PAGE>

                                    SUBLEASE

          SUBLEASE made as of February 15, 1999 by and between Xenergy Inc., a
Massachusetts corporation with a principal office at Three Burlington Woods
Drive, Burlington, Massachusetts 01803-4543 (the "Sublandlord"), and
Etility.com, Inc., a Delaware corporation, with a principal office at 52-D
Cummings Park, Woburn, Massachusetts 01801 (the "Subtenant").

                                   WITNESSETH:

          WHEREAS, pursuant to that certain Lease dated March 28, 1991 (the
"Master Lease"), a copy of which has been delivered to Subtenant, James S.
Hekiman and William G. Finard as Trustees of Burlington Woods Office Trust No.
III under Declaration of Trust dated March 1, 1984 and recorded with the
Middlesex South Registry of Deeds in Book 15673, Page 31, as amended (herein
referred to as "Original Landlord"), leased to Sublandlord, as Tenant, certain
premises located in the fourth floor of the building known as and numbered Three
Burlington Woods Drive, Burlington, Massachusetts, as more particularly
described in the Master Lease (the "Demised Premises") Three Burlington Woods
LLC (the "Landlord") is the successor to the Original Landlord as landlord under
the Master Lease; and

          WHEREAS, subject to the agreements, covenants and conditions herein
contained Subtenant wishes to sublease from Sublandlord, and Sublandlord wishes
to sublease to Sublessee, a portion of the Demised Premises containing 9,731
square feet of rentable space, and being shown on the plan attached hereto as
Exhibit A (the "Subleased Premises");

          NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

     1.   DEMISE.

          1.1 Sublandlord, in consideration of the rents herein reserved and of
the agreements, covenants and conditions herein contained and expressed on the
part of Subtenant to be kept, performed and observed, hereby demises and lets
unto Subtenant and Subtenant hereby leases from Sublandlord the Subleased
Premises. The Subleased Premises are leased in an "as is" condition.

     The foregoing notwithstanding, Subtenant may, at its sole cost and expense,
make the alterations and improvements described in Exhibit B attached hereto
(the "Tenant Improvements"), using one or more responsible contractors, and
pursuant to plans and specifications, first approved by Sublandlord. All such
Tenant Improvements shall be made in a good and first class workmanlike manner
employing materials of good quality and so as to conform with all applicable
provisions of the Master Lease and applicable zoning, building, fire, health and
other codes, regulations, ordinances and laws. Subtenant shall pay promptly when
due the entire cost of such Tenant Improvements so that the Subleased Premises
shall at all times be free of liens for labor and materials. Any contractor or
other person undertaking such Tenant Improvements shall be covered by

<PAGE>

worker's compensation insurance and evidence thereof shall be furnished to
Sublandlord prior to the performance by such contractor or person of any such
work to the Subleased Premises.

          Subject to the terms and conditions of Section 2.2 of the Master
Lease, Subtenant shall have available for its use and that of its employees and
invitees a number of parking spaces equal to 3.3 per 1,000 square feet of
rentable space included in the Subleased Premises. Such parking spaces shall be
used by Subtenant, its employees and invitees in common with others entitled
thereto.

          Subject to Landlord's approval, Subtenant at its expense may install a
sign at the Building entrance and have its name and location placed in the
tenant directory in the Building lobby.

          Sublandlord will also lease to Subtenant during the term hereof at no
additional charge certain office furniture, as more particularly described in
Exhibit C attached hereto, for use in the Subleased Premises during the term
hereof. Subtenant acknowledges that Sublandlord has made no representations or
warranties regarding any such furniture, and Subtenant shall be responsible for
any damages to such leased furniture, wear and tear excepted. The cost to
Subtenant for any such damage shall not exceed the fair market value of such
damaged furniture.

     2.   TENANCY-AT-WILL; TERM.

          2.1 Subtenant hereby acknowledges and agrees that it shall be a tenant
at will of the Subleased Premises at all times from the Commencement Date until
the Conversion Date, as those terms are hereinafter defined. The "Commencement
Date" shall mean that date which is the earlier of (i) February 15, 1999; or
(ii) the date on which Subtenant takes occupancy of the Subleased Premises. The
"Conversion Date" shall mean that date on which Subtenant enters into a
financing arrangement with a commercial bank or other institutional lender for
greater than $2 millon and pays the Additional Deposit as provided in Section
4.1 hereof. Anything in this Sublease to the contrary notwithstanding, in the
event that Subtenant does not enter into such financing arrangement and does not
pay the Additional Deposit to Sublandlord on or before June 30, 1999, then this
Sublease shall be deemed to terminate automatically on such date without further
action or notice by Sublandlord, and Sublandlord shall have all rights and
remedies pursuant to the provisions of this Sublease and applicable law. The
period prior to the Conversion Date or termination of this Sublease pursuant to
the foregoing sentence shall be hereinafter referred to as the "Tenancy at
Will".

          2.2 Provided that this Lease is not terminated pursuant to the
provisions of Section 2.1, on the Conversion Date the Tenancy at Will shall be
converted to a subleasehold having a term (the "Fixed Term") commencing on the
Conversion Date and ending on August 15, 2000, unless sooner terminated in
accordance with the terms hereof.

      3.               RENT.

          3.1 Subtenant covenants and agrees to pay to Sublandlord, at its
address

                                       -2-
<PAGE>

first hereinabove written or at such other address as Sublandlord may by notice
in writing to Subtenant from time to time direct, on the Commencement Date and
thereafter, monthly, in advance, on the fifteenth day of each month during the
Tenancy at Will or the Fixed Term, as the case may be, fixed rent (the "Fixed
Rent") in a monthly amount equal to (i) $10,750.00 (the "Abated Rental Rate")
during the first six (6) months from and after the Commencement Date, it being
acknowledged that during such six (6) month period Subtenant shall pay rent at
the annual rate of $21.50 per square foot of rentable space with respect to a
portion of the Subleased Premises consisting of 6,000 square feet of rentable
space shown on Exhibit A, and that during such six (6) month period Subtenant
shall receive a rent abatement with respect to the remainder of the Subleased
Premises; and (ii) $17,434.71 (the "Full Rental Rate") during the remainder of
the term, representing annual rent in the amount of $21.50 per square foot of
rentable space with respect to the entire Subleased Premises.

          Fixed Rent for any partial month shall be paid by Subtenant at such
rate on a pro rata basis, and if the Tenancy at Will or the Fixed Term commences
on a day other than the fifteenth day of a calendar month, the first payment
which Subtenant shall make shall be a payment equal to a proportionate part of
such monthly Fixed Rent for the partial month from the Commencement Date to the
fifteenth day of the succeeding calendar month, and the monthly Fixed Rent for
such succeeding calendar month.

          3.2 The parties agree that the Fixed Rent payable by Subtenant
hereunder is intended to be gross rent inclusive of charges for daily
cleaning and gas furnished to the Subleased Premises, which are not
separately metered, and that Subtenant shall not be responsible for payment
of any portion of any Tax Amount Escalation Factor or any Operating Base
Escalation Factor (as those terms are defined in the Master Lease) which may
be payable by Sublandlord to Landlord pursuant to the Master Lease or any
other charges under the Master Lease not specifically identified herein.
Notwithstanding the foregoing, Subtenant shall be responsible for its pro
rata share (based on a ratio in which the rentable square foot area of the
Subleased Premises is the numerator and the rentable square foot area of the
Demised Premises is the denominator) of charges for electricity for lighting
and equipment utilized at the Demised Premises, currently estimated to be 85
CENTS per square foot of rentable space per year. Subtenant's share of such
electricity charges shall constitute additional rent ("Additional Rent")
hereunder, and shall be due and payable by Subtenant in each month on the
same date that Fixed Rent is due and payable. Sublandlord shall provide
Subtenant with monthly statements containing a calculation of Subtenant's pro
rata share of such electricity charges during each month in which Subtenant
occupies the subleased Premises. Subtenant also agrees that it shall be
responsible for all costs and expenses ("Overtime HVAC Expenses") associated
with the provision of HVAC services that Subtenant requests to be provided to
the Subleased Premises at times other than Normal Building Operating Hours,
which term is defined in the Master Lease to include the hours of 8:00 A.M.
to 6:00 P.M. Monday through Friday. Subtenant shall pay all such Overtime
HVAC Expenses as Additional Rent promptly upon receipt of Sublandlord's
invoice therefor.

          3.3 All other costs and expenses which Subtenant is required to pay
under this Sublease, including without limitation costs for additional services
or additional utilities supplied to the Subleased Premises by Sublandlord or
Landlord, if any, together with all penalties that may accrue thereon in the
event of the Subtenant's failure to pay

                                       -3-
<PAGE>

such amounts, and all damages, costs and expenses which Sublandlord may incur by
reason of any failure by Subtenant to comply with the terms of this Sublease,
shall be deemed to be Additional Rent when due and payable. Sublandlord shall
have all rights and remedies with respect to such failure as Sublandlord has for
the non-payment of Fixed Rent.

          3.4 Subtenant shall pay to Sublandlord a late charge of one percent
(1.0%) per month on all amounts due to Sublandlord under this Sublease which are
not paid within five (5) days from the date that the same shall become due and
payable.

     4.   SECURITY DEPOSIT.

          4.1 In addition to the amount paid by Subtenant to Sublandlord
pursuant to Section 3.1 to be applied toward the first monthly rental payment
hereunder, Subtenant has this day deposited with Sublandlord the sum of
$10,750.00 (the "Initial Deposit") (representing one month's Fixed Rent at the
Abated Rental Rate) as security for the full and faithful observance, payment
and performance by Subtenant of all the terms, covenants and conditions of this
Sublease upon Subtenant's part to be performed. On the Conversion Date Subtenant
shall deposit with Sublandlord the additional sum of $21,500.00 (the "Additional
Deposit") (representing an additional two months' Fixed Rent at the Abated
Rental Rate). The Initial Deposit and the Additional Deposit shall be
collectively referred to hereinafter as the "Security Deposit". Such sums shall
be returned to Subtenant within a reasonable time, which shall not exceed thirty
(30) days, after the expiration of the term provided Subtenant shall have fully
and faithfully observed, paid and performed all of the said terms, covenants and
conditions. If all or any part of the Security Deposit is applied to an
obligation of Subtenant hereunder, Subtenant shall immediately upon request by
Sublandlord restore the Security Deposit to its original amount. Subtenant shall
not have the right to call upon Sublandlord to apply all or any part of the
Security Deposit to cure any default or fulfill any obligation of Subtenant, but
such use shall be solely in the discretion of Sublandlord. Provided that
Sublandlord gives Subtenant written notice of the name of such grantee or
transferee, upon any conveyance by Sublandlord of its interest under this
Sublease, the Security Deposit may be delivered by Sublandlord to Sublandlord's
grantee or transferee. Upon any such delivery, Subtenant hereby releases
Sublandlord herein named of any and all liability with respect to the Security
Deposit, its application and return, and Subtenant agrees to look solely to such
grantee or transferee, provided that such grantee or transferee agrees in
writing to be bound by all of the same terms and conditions by and between
Sublandlord and Subtenant contained in this Sublease and the Master Lease. It is
further understood that this provision shall also apply to subsequent grantees
and transferees.

     5.   PERMITTED USES.

          5.1 Subtenant shall use the Subleased Premises for business office use
and other uses incidental thereto to the extent permitted by law and consistent
with the use of the Building as a so-called first-class office building and for
no other purposes.

                                      -4-
<PAGE>

     6.   NO ASSIGNMENT OR SUBLETTING.

          6.1 Subtenant may not assign this Sublease or sublet any portion of
the Subleased Premises under any circumstances.

     7.   CONDITION OF THE PREMISES.

          7.1 Subtenant acknowledges that except as otherwise expressly provided
herein, neither Sublandlord nor any person on behalf of the Sublandlord has made
any warranties or representations regarding the condition or suitability of the
Subleased Premises, and that Subtenant has inspected the Subleased Premises to
its satisfaction prior to the execution of this Sublease.

     8.   SURRENDER.

          8.1 At the termination of this Sublease, Subtenant shall surrender the
Subleased Premises to Sublandlord, broom clean with all alterations, additions
and improvements thereto, in as good condition as on the date of delivery to
Subtenant or as the Subleased Premises may be put in during the term of the
Sublease, reasonable wear and tear and loss by fire and casualty excepted. For
each day after termination of the Tenancy at Will as provided in Section 2.1 or
the expiration of the term, as the case may be, or the earlier termination of
this Sublease, and prior to Subtenant's performance of its obligations to
surrender the Demised Premises under this Article 8, Subtenant shall (i) pay to
Sublandlord rent in two (2) times the Fixed Rent computed on a daily basis,
together with all Additional Rent payable with respect to each such day, and
(ii) defend, indemnify and hold harmless the Sublandlord from and against all
loss, claims, cost and damage resulting from Subtenant's delay in surrendering
the Subleased Premises as above provided.

     9.   INSURANCE.

          9.1 Subtenant shall obtain prior to the Commencement Date, and shall
keep in force at all times thereafter, Comprehensive General Liability Insurance
in accordance with the broadest form of such coverage as is available from time
to time in the jurisdiction in which the Subleased Premises are located naming
Sublandlord and Landlord as additional insureds and insuring Subtenant against
liability for injury to persons and damage to property, covering all Subtenant's
obligations under this Sublease. The minimum limits of liability of such
insurance shall be $1 million per occurrence, Bodily Injury Liability (including
death) and Property Damage Liability, and shall be for such higher limits, if
directed by Landlord, as are customarily carried in that area in which the
Building is located upon property similar to the Building.

          9.2 All insurance required under Section 9.1 above shall be written
with Subtenant's current insurance company or companies reasonably satisfactory
to Landlord and Sublandlord and in forms customarily in use from time to time
in the locality of the Subleased Premises. Subtenant shall, upon request,
furnish the Landlord and Sublandlord with duplicates of certificates of said
policies, and said policies shall provide that the coverage thereunder may not
lapse, be modified, cancelled, or its renewal be refused without ten (10) days
prior written notice to Landlord, Sublandlord and Subtenant and if required by
Sublandlord or Landlord, to holders of mortgages on the Subleased Premises.

                                      -5-
<PAGE>

     10. INCORPORATION OF PROVISIONS OF
         MASTER LEASE BY REFERENCE.

          10.1 Except as otherwise expressly provided herein, all of the terms,
covenants and conditions of the Master Lease are incorporated herein by
reference and made a part hereof with the same force and effect as if set forth
herein in their entirety, it being understood and agreed that such terms and
conditions shall fix the obligations of Subtenant with the same effect as if
Subtenant were the tenant in the Master Lease; provided, however, that whenever
the terms and conditions of the Master Lease are contradictory to or
inconsistent with the terms and conditions hereof, the terms and conditions
hereof shall be controlling; provided further that (a) nothing herein contained
shall be construed to derogate from the obligations of the Sublandlord and
Subtenant to comply with the provisions of the Master Lease; and (b) those
incorporated provisions of the Master Lease which are protective and for the
benefit of the Landlord shall in this Sublease be deemed to be protective and
for the benefit of both the Landlord and Sublandlord, and those provisions of
the Master Lease which are protective and for the benefit of the Tenant shall be
deemed to be protective and for the benefit of the Tenant and Subtenant.

     11.  COVENANTS OF THE PARTIES.

          11.1 Subtenant covenants and agrees to perform and observe all the
terms, covenants and conditions applicable to the Subleased Premises and
required to be performed by Sublandlord as Lessee under the Master Lease, except
for the obligation to make payments of rent (including additional rent) to
Landlord or as otherwise provided herein. Subtenant further agrees that
Subtenant's performance of all such obligations shall be performed by Subtenant
for the benefit of Sublandlord as well as for the benefit of Landlord, and that
Sublandlord shall have, with respect to Subtenant, this Sublease and the
Subleased Premises, all of the rights and benefits provided to the Landlord by
the Master Lease. Subtenant will exonerate, indemnify and hold harmless
Sublandlord from and against any and all claims, suits, obligations, liabilities
and damages, including without limitation reasonable attorneys' fees and
disbursements, resulting from the inaccuracy of Subtenant's representations
and warranties and the failure by Subtenant to perform, fulfill or observe
Subtenant's covenants and agreements set forth in this Sublease.

          11.2 This Sublease and all of the terms, covenants, representations,
warranties, agreements and conditions hereof are in all respects subject and
subordinate to the Master Lease, and Subtenant covenants and agrees with
Sublandlord not to do or permit to be done any act of commission or omission
which would constitute a violation or default under the Master Lease if done or
permitted to be done by Sublandlord.

          11.3 Sublandlord shall, upon written request by Subtenant, use
reasonable efforts to obtain from Landlord all permissions and consents needed
by Subtenant to perform any act permitted by this Sublease when such permissions
or consents are required by reason of the incorporation by reference of the
terms, covenants and conditions of the Master Lease. Subtenant shall reimburse
Sublandlord upon demand for the reasonable costs and expenses (including
reasonable attorney fees) incurred by

                                       -6-
<PAGE>

Sublandlord in obtaining or pursuing such permissions and consents provided that
such fees shall be shared by Sublandlord and Subtenant on a proportionate basis
in any instance in which Sublandlord is also seeking any such permission or
consent for its own benefit.

          11.4 Provided that Subtenant is not in default hereunder, Subtenant
shall be entitled to the benefit of Landlord's obligations under the Master
Lease to the extent such obligations relate to the Subleased Premises.
Notwithstanding anything contained herein or in the Master Lease to the
contrary, however, but subject to Section 11.5 of this Sublease, Sublandlord
shall not be responsible for the performance of the Landlord's obligations under
the Master Lease, and Sublandlord shall not be liable in damages or otherwise
for any negligence of Landlord or for any damage or injury suffered by Subtenant
as a result of any act or failure to act by Landlord, or any default by Landlord
in the performance of its obligations under the Master Lease, nor shall any such
action, failure to act, or default by Landlord constitute a constructive
eviction or default by Sublandlord hereunder.

          11.5 In the event of any breach of Landlord's obligations under the
Master Lease, Sublandlord hereby authorizes Subtenant to deal directly with
Landlord with respect to said breach. In the event that Landlord fails to remedy
such breach after such request from Subtenant, Sublandlord, upon the written
request of Subtenant shall, if necessary, commence and diligently prosecute
proceedings to enforce, in its own name and for the benefit of Subtenant, the
performance of any of Landlord's obligations under the Master Lease which
Landlord wrongfully fails or refuses to perform. Should Subtenant so request
Sublandlord and such enforcement of Landlord's obligations under the Master
Lease shall be for the sole benefit of Subtenant, then Subtenant shall indemnify
Sublandlord and save Sublandlord harmless from and against any and all
liabilities, obligations, claims, damages, fines, penalties, causes of action,
costs and expenses (including without limitation reasonable attorney fees and
disbursements) imposed upon or incurred by or asserted against Sublandlord by
reason of any action or inaction by Sublandlord and/or Subtenant to enforce any
obligations of Landlord under the Master Lease for the benefit of Subtenant.
Should Subtenant so request Sublandlord, and the enforcement of Landlord's
obligations under the Master Lease shall be of mutual benefit to Sublandlord and
Subtenant, then the costs and expenses of any such enforcement proceedings shall
be shared by Sublandlord and Subtenant in proportion to the benefit conferred.
Sublandlord shall promptly provide Subtenant with a copy of any notice by
Sublandlord to Landlord with respect to any matter materially affecting the
Subleased Premises.

          11.6 Sublandlord shall not incur any liability whatsoever to Subtenant
for any injury, inconvenience, incidental or consequential damages incurred or
suffered by Subtenant as a result of the exercise by Landlord of any of the
rights reserved to Landlord under the Master Lease, nor shall such exercise
constitute a constructive eviction or a default by Sublandlord hereunder;
provided, however, that Sublandlord shall be liable for damages to Subtenant
arising from Sublandlord's breach of its covenant in Section 11.9 hereof to
perform and observe the terms of the Master Lease, and provided further that if
and so long as a recognition agreement between Landlord and Subtenant reasonably
acceptable to Subtenant is in effect, all damages under this Section 11.6
arising from and after the effective date of such recognition agreement shall be
deemed to have been

                                       -7-
<PAGE>

totally mitigated.

          11.7 Sublandlord covenants that, subject to the terms and conditions
of the Master Lease and this Sublease, if and so long as Subtenant keeps and
performs each term and condition herein contained on its part to be kept and
performed, Subtenant shall not be disturbed in the enjoyment of the Subleased
Premises by Sublandlord or by anyone claiming by, through or under Sublandlord.

          11.8 Sublandlord covenants and agrees that Sublandlord will not enter
into any amendment, modification or other agreement with respect to the Master
Lease which will prevent or adversely affect the use by Subtenant of the
Subleased Premises in accordance with the terms of this Sublease, or increase
the obligations of Subtenant, except as provided herein, or decrease its rights
under this Sublease, except as provided herein, or in any other way adversely
affect Subtenant, or shorten the term of this Sublease (unless acting in
accordance with the terms hereof), without the prior written consent of
Subtenant.

          11.9 Sublandlord covenants and agrees to perform and observe all the
terms, covenants and conditions required to be performed by Sublandlord as
Tenant under the Master Lease, except for those obligations which Subtenant has
agreed to perform under the terms of this Sublease.

     12.  DEFAULTS BY SUBTENANT.

          12.1 In the event that Subtenant shall default in the payment of Fixed
Rent or Additional Rent hereunder, or shall default in the performance or
observance of any of the terms, conditions and covenants of this Sublease,
Sublandlord, in addition to and not in limitation of any rights otherwise
available to it, shall have the same rights and remedies with respect to such
default as are provided to the Landlord under the Master Lease with respect to
defaults by the Tenant thereunder, with the same force and effect as though all
such provisions relating to any such default or defaults were set forth herein
in their entirety, and Subtenant shall perform with respect to the Subleased
Premises all of the obligations of the Tenant under the Master Lease with
respect to such default which are applicable thereto.

          12.2 In the event of a default by Subtenant in the performance of any
of its non-monetary obligations hereunder, Sublandlord may, at its option, and
without waiving any other remedies for such default herein or at law or by
incorporation by reference of the Master Lease provided, at any time thereafter,
give written notice to Subtenant that if such default is not cured, or the cure
not commenced, within ten (10) days after receipt of such notice by Subtenant,
and if so commenced is not thereafter pursued diligently to completion,
Sublandlord may cure such default for the account of Subtenant, and any amount
paid or incurred by Sublandlord in so doing shall be deemed paid or incurred for
the account of Subtenant and Subtenant agrees to promptly reimburse Sublandlord
therefor and save Sublandlord harmless therefrom; provided, however, that
Sublandlord may cure any such default as aforesaid prior to the expiration of
any waiting period, upon 48 hours prior notice to Subtenant if reasonably
necessary to protect Sublandlord's interests under the Master Lease, or without
notice if required to prevent injury or damage to persons or property. If
Subtenant shall fail to reimburse Sublandlord upon demand for

                                       -8-
<PAGE>

any amount paid for the account of Subtenant hereunder, said amount shall be
added to, and become due as a part of, the next payment of Fixed Rent due
hereunder.

     13.  TERMINATION; DAMAGE, DESTRUCTION OR EMINENT DOMAIN.

          13.1 This Sublease shall terminate upon any termination of the Master
Lease for any reason (subject, however, to the provisions of Section 11.8
hereof) whatsoever which deprives the Sublandlord, as Tenant under the Master
Lease, of possession of that portion of the Demised Premises which is the
Subleased Premises, without any liability therefor upon the part of Sublandlord
to Subtenant and with the same force and effect as if the date of such
termination had expressly been provided in this Sublease as the date of
termination hereof.

          13.2 In the event that the rent due to Landlord from Sublandlord as
Tenant under the Master Lease shall be abated as a result of damage or
destruction to the Subleased Premises or as a result of eminent domain
proceedings affecting the Subleased Premises, the rent due to Sublandlord from
Subtenant hereunder shall be proportionately abated.

          13.3 Subtenant shall not be entitled to any part of any damages
awarded to Sublandlord as the result of an eminent domain proceeding; provided,
however, that Subtenant may make a claim against the condemning authority for
the value of Subtenant's trade fixtures or other personalty which Subtenant
shall be entitled to remove upon termination of the Sublease, provided that such
separate award shall not reduce the award payable to Sublandlord.

     14.  MISCELLANEOUS.

          14.1 ADDITIONAL REPRESENTATIONS OF SUBTENANT. Subtenant hereby
represents, warrants and covenants as follows:

          (i) Subtenant is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, and is qualified and in good standing
as a foreign corporation in Massachusetts and in any and all other jurisdictions
in which the failure to so qualify would have a material adverse effect on its
business or operations.

          (ii) The execution, delivery and performance of this Sublease by
Subtenant has been duly and validly authorized by all necessary corporate action
of Subtenant. Subtenant has all requisite corporate power and authority to enter
into this Sublease.

          (iii) The execution, delivery and performance of this Sublease by
Subtenant will not violate (a) any provision of its Articles of Organization or
By-Laws; (b) any law of any jurisdiction by which Subtenant is bound; or (c) any
provision of, or result in a default or acceleration of, or result in the
creation of any lien, charge

                                      -9-
<PAGE>

     or encumbrance upon any asset of Subtenant pursuant to any agreement,
     instrument, order, judgment or decision to which Subtenant is a party or
     by which it is bound.

          (iv) There is no legal, administrative, arbitration or other action
     or proceeding or governmental investigation pending or, to the knowledge
     of Subtenant, threatened against Subtenant, or against any officer,
     director or employee thereof, which, if adversely determined, might call
     into question the validity of this Sublease or which might restrict
     transactions contemplated by this Sublease.

          14.2 RIGHT OF ENTRY. Sublandlord shall have the right to enter the
Subleased Premises at reasonable times and upon reasonable prior notice (which
need not be in writing), except in cases of emergency, for the purpose of
inspection, maintenance and repair, exhibiting the Subleased Premises to
prospective purchasers, lenders and tenants and for any other reasonable
purpose.

          14.3 SUBTENANT ACCESS. At no additional charge to Subtenant,
Sublandlord shall furnish or cause Landlord to furnish to Subtenant for use by
its employees, access cards to the Subleased Premises as described in Section
2.2 of the Master Lease. Subtenant shall provide such access cards only to its
bona fide employees, a list of which shall be provided to Sublandlord on and as
of the Commencement Date. The aforesaid list shall be updated as may be
necessary to keep it current at all times.

          14.4 NOTICES. All notices, demands or other communications to be
given, made or sent by either party to the other under this Sublease shall be
deemed to have been fully given, made or sent when made in writing and delivered
by hand, or when mailed, by registered or certified mail, return receipt
requested, postage prepaid, addressed to the party at its address first
hereinabove written, or in the case of Subtenant to the Subleased Premises, or
to such other address or addresses as may from time to time hereafter be
designated by the parties by like notice.

          14.5 BINDING EFFECT. This Sublease shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective personal
representatives, successors and permitted assigns.

          14.6 APPLICABLE LAW. This Sublease and the rights and obligations of
the parties hereunder shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.

          14.7 MODIFICATION. Neither this Sublease nor any provision hereof may
be waived, modified, amended, discharged or terminated, except by an instrument
in writing signed by the party against which the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument. Any such waiver, modification,
amendment, discharge or termination of this Sublease is subject to the prior
written approval of Landlord.

          14.8 APPROVAL OF LANDLORD. The obligations of the parties hereto are
conditioned upon the written approval of Landlord of this Sublease.

                                      -10-
<PAGE>

          14.9 SEVERABILITY. If any term or provision of this Sublease or the
application thereof to any person or circumstance shall to any extent be held
invalid or unenforceable, the remainder of this Sublease or the application of
such term or provision to other persons or circumstances shall not be affected
thereby, and each term and provisions of this Sublease shall be valid and
enforceable to the fullest extent permitted by law.

          14.10  BROKER. Each of Sublandlord and Subtenant represents and
warrants to the other that it has not dealt with any broker in connection with
the transactions contemplated by this Sublease, other than the Sublandlord's
broker, Lynch, Murphy, Walsh & Partners Incorporated (the "Broker"). Each party
agrees to indemnify and hold the other harmless from and against any and all
claims, demands, causes of action, losses, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorney fees and
disbursements) asserted against or incurred by the other by reason of, or
arising out of, any claim for a commission or other fee by any person or firm
claiming to have dealt with the indemnifying party in connection with the
transactions contemplated by this Sublease or the negotiation hereof, it being
agreed that Sublandlord shall be solely for commissions due and payable to the
Broker with respect to such transactions.

          IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
duly executed under seal as of the date first hereinabove written.

                                           XENERGY INC.

                                           By: /s/ John R. Graham
                                              ------------------------
                                                           , its Treasurer

                                           ETILITY.COM, INC.

                                           By: /s/ Akhil Garland
                                              ---------------------------
                                                           , its President

                                      -11-
<PAGE>

                                    EXHIBIT A

                               SUBLEASED PREMISES

                            SEE ATTACHED FLOOR PLAN

                                      -12-
<PAGE>

                                    EXHIBIT B

                               TENANT IMPROVEMENTS

                  Removal of approximately 4-5 simple drywalls

                  Carpet "patching"

                  "Almost to the ceiling" removal (one wall near
                   kitchenette and one near reception area)

                  ALL AS INDICATED ON THE ATTACHED FLOOR PLAN

                                      -13-
<PAGE>

                                                              EXHIBIT C

                                                            LEASED FURNITURE

All Metal Desks

          1-two right drawers
          2-three right drawers
          3-three left drawers
          6-three drawers, L shaped, similar to desks in office
          1-three left drawers, three right drawers with broken middle drawer
          2-three left drawers, three right drawers with middle drawer

Wooden Topped Desks

          1-middle drawer only
          1-two right drawers, two left drawers
          3-two right drawers, three left drawers
          1-two left drawers, three right drawers
          7-three left drawers, two right drawers with middle drawer
          4-two left drawers, three right drawers with middle drawer
          1-three right drawers, three left drawers with middle drawer
          1-two left drawers, one right drawer with wooden drawers and.top

Wooden Desks

          1-three left drawers, three right drawers
          1-two right drawers, two left drawers with shelving above head
          1-two right drawers with left arm, left arm contains drawers and
            shelves
          1-two left drawers, two right drawers
          1-three left drawers, two right drawers

Cubical Desks

          2

Wooden Tables

          2-small
          2-round

Conference Tables

          1

                                      -14-
<PAGE>

Folding Tables

          14

Plant Stand

          1-glass

Book Shelves

          11-metal
          1-tall wood
          1-medium wood

File Cabinets

          10 vertical four drawer
          5-vertical two drawer
          6-horizontal two drawer
          2-horizontal four drawer

Cabinet

          1-three drawer

Swivel Chairs

          22-grey, high back with cloth arms
          1-blue, medium back
          1-grey, low back with cloth arms
          2-grey, medium back with black arms
          3-red, high back without arms
          1-grey, high back with black arms
          1-grey, medium, wide back with cloth arms
          1-light blue, medium back without arms
          4-green, medium back with black arms
          1-dark green, medium back with black arms

Cloth Side Chairs

          24-black and purple, low back with black arms
          8-red, low, wide back with cloth arms

Plastic Side Chairs

          14

                                      -15-<PAGE>

                    SUBORDINATED LOAN AND SECURITY AGREEMENT

         THIS AGREEMENT (the "AGREEMENT"), dated as of September 24, 1999, is
entered into by and between essential.com, inc., a Delaware corporation, with
its chief executive office, and principal place of business located at 3
Burlington Woods Drive, 4th Floor, Burlington, MA 01803 (the "BORROWER") and
COMDISCO, INC., a Delaware corporation, with its principal place of business
located at 6111 North River Road, Rosemont, Illinois 60018 (the "LENDER" or
sometimes, "COMDISCO"). In consideration of the mutual agreements contained
herein, the parties hereto agree as follows:

                                    RECITALS

         WHEREAS, Borrower has requested Lender to make available to Borrower a
loan in the aggregate principal amount of FOUR MILLION and 00/100 DOLLARS
($4,000,000.00) in minimum installments of TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000.00) each (as the same may from time to time be amended, modified,
supplemented or revised, the "LOAN"), which would be evidenced by Subordinated
Promissory Note(s) executed by Borrower substantially in the form of EXHIBIT A
hereto (as the same may from time to time be amended, modified, supplemented or
restated the "Note(s)") as set forth in Section 2 herein.

         WHEREAS, Lender is willing to make the Loan on the terms and conditions
set forth in this Agreement, and

         WHEREAS, Lender and Borrower agree any Loan hereunder shall be
subordinate to Senior Debt (as defined herein) to the extent set forth in the
Subordination Agreement (as defined herein).

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, Borrower and Lender hereby agree as follows:

SECTION 1. DEFINITIONS

         Unless otherwise defined herein, the following capitalized terms shall
have the following meanings (such meanings being equally applicable to both the
singular and plural form of the terms defined);

         1.1 "ACCOUNT" means any "account," as such term is defined in Section
9106 of the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest and, in any event, shall
include, without limitation, all accounts receivable, book debts and other forms
of obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to Borrower (including, without limitation, under any trade
name, style or division thereof) whether arising out of goods sold or services
rendered by Borrower or from any other transaction, whether or not the same
involves the sale of goods or services by Borrower (including, without
limitation, any such obligation which may be characterized as an account or
contract right under the UCC) and all of Borrower's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods or

                                       1
<PAGE>

services, and all of Borrower's rights to any goods represented by any of the
foregoing (including, without limitation, unpaid seller's rights of rescission,
replevin, reclamation and stoppage in transit and rights to returned, reclaimed
or repossessed goods), and all monies due or to become due to Borrower under all
purchase orders and contracts for the sale of goods or the performance of
services or both by Borrower (whether or not yet earned by performance on the
part of Borrower or in connection with any other transaction), now in existence
or hereafter occurring, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts, and all collateral security and
guarantees of any kind given by any Person with respect to any of the foregoing.

         1.2 "ACCOUNT DEBTOR" means any "account debtor," as such term is
defined in Section 9105(1)(a) of the UCC.

         1.3 "ADVANCE" means each installment made by the Lender to Borrower
pursuant to the Loan to be evidenced by the Note(s) secured by the Collateral.

         1.4 "ADVANCE DATE" means the funding date of any Advance of the Loan.

         1.5. "ADVANCE REQUEST" means the request by Borrower for an Advance
under the Loan, each to be substantially in the form of EXHIBIT C attached
hereto, as submitted by Borrower to Lender from time to time.

         1.6 "CHATTEL PAPER" means any "chattel paper," as such term is defined
in Section 9105(1)(b) of the UCC, now owned or hereafter acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest.

         1.7 "CLOSING DATE" means the date hereof.

         1.8 "COLLATERAL" shall have the meaning assigned to such term in
Section 3 of this Agreement.

         1.9 "CONTRACTS" means all contracts, undertakings, franchise agreements
or other agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which Borrower may now or hereafter have any right,
title or interest, including, without limitation, with respect to an Account,
any agreement relating to the terms of payment or the terms of performance
thereof.

         1.10 "COPYRIGHTS" means all of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (i) all copyrights, whether registered or unregistered, held pursuant
to the laws of the United States, any State thereof or of any other country;
(ii) registrations, applications and recordings in the United States Copyright
Office or in any similar office or agency of the United States, any state
thereof or any other country; (iii) any continuations, renewals or extensions
thereof, and (iv) any registrations to be issued in any pending applications.

         1.11 "COPYRIGHT LICENSE" means any written agreement granting any right
to use any Copyright or Copyright registration now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest.

                                       2
<PAGE>

          1.12 "DOCUMENTS" means any "documents," as such term is defined in
Section 9105(1)(f) of the UCC, now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest.

          1.13 "EQUIPMENT" means any "equipment," as such term is defined in
Section 9109(2) of the UCC, now or hereafter owned or acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.

          1.14 "EXCLUDED AGREEMENTS" means (i) any Warrant Agreement(s) executed
hereunder, and any other warrants (including without limitation, the warrant
agreement dated as of September 24, 1999) to acquire, or agreements governing
the rights of the holders of, any equity security of Borrower, (ii) any stock of
the Borrower issued or purchased pursuant to the Warrant Agreement, and (iii)
the Master Lease Agreement dated as of September 24, 1999 between Borrower, as
lessee, and Lender, as lessor, including, without limitation, any Equipment
Schedules and Summary Equipment Schedules to the Master Lease Agreement executed
or delivered by Borrower pursuant thereto and any other modifications or
amendments thereof, whereby Borrower (as lessee) leases equipment, software, or
goods from Lender (as lessor) to Borrower (as lessee).

          1.15 "FACILITY FEE" means one percent (1.0%) of the principal amount
of the Loan due at the Closing Date, plus a transaction, due diligence fee in
the amount of $5,000.00.

          1.16 "FIXTURES" means any "fixtures," as such term is defined in
Section 9313(1)(a) of the UCC, now or hereafter owned or acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest and, now or
hereafter attached or affixed to or constituting a part of, or located in or
upon, real property wherever located, together with all right, title and
interest of Borrower in and to all extensions, improvements, betterments,
renewals, substitutes, and replacements of, and all additions and appurtenances
to any of the foregoing property, and all conversions of the security
constituted thereby, immediately upon any acquisition or release thereof or any
such conversion, as the case may be.

          1.17 "GENERAL INTANGIBLES" means any "general intangibles," as such
term is defined in Section 9106 of the UCC, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest and,
in any event, shall include, without limitation, all right, title and interest
which Borrower may now or hereafter have in or under any contract, all customer
lists, Copyrights, Trademarks, Patents, rights to Intellectual Property,
interests in partnerships, joint ventures and other business associations,
Licenses, permits, trade secrets, proprietary or confidential information,
inventions (whether or not patented or patentable), technical information,
procedures, designs, knowledge, know-how, software, data bases, data, skill,
expertise, recipes, experience, processes, models, drawings, materials and
records, goodwill (including, without limitation, the goodwill associated with
any Trademark, Trademark registration or Trademark licensed under any Trademark
License), claims in or under insurance policies, including unearned premiums,
uncertificated securities, cash and other forms of money or currency, deposit
accounts (including as defined in Section 9105(e) of the UCC), rights to sue for
past, present and future infringement of Copyrights, Trademarks and patents,
rights to receive tax refunds and other payments and rights of indemnification.

                                       3
<PAGE>

          1.18 "INSTRUMENTS" means any "instrument," as such term is defined in
Section 9105(l)(i) of the UCC, now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest.

          1.19 "INTELLECTUAL PROPERTY" means all Copyrights, Trademarks,
Patents, trade secrets, source codes, customer lists, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, skill, expertise, experience, processes, models, drawings, materials and
records.

          1.20 "INVENTORY" means any "inventory," as such term is defined in
Section 9109(4) of the UCC, wherever located, now or hereafter owned or acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest,
and, in any event, shall include, without limitation, all inventory, goods and
other personal property which are held by or on behalf of Borrower for sale or
lease or are furnished or are to be furnished under a contract of service or
which constitute raw materials, work in process or materials used or consumed or
to be used or consumed in Borrower's business, or the processing, packaging,
promotion, delivery or shipping of the same, and all furnished goods whether or
not such inventory is listed on any schedules, assignments or reports furnished
to Lender from time to time and whether or not the same is in transit or in the
constructive, actual or exclusive occupancy or possession of Borrower or is held
by Borrower or by others for Borrower's account, including, without limitation,
all goods covered by purchase orders and contracts with suppliers and all goods
billed and held by suppliers and all inventory which may be located on premises
of Borrower or of any carriers, forwarding agents, truckers, warehousemen,
vendors, selling agents or other persons.

          1.21 "LICENSE" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest
and any renewals or extensions thereof.

          1.22 "LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, levy, lien or charge of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise, against any property, any conditional sale or other title retention
agreement, any lease in the nature of a security interest, and the filing of any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.

          1.23 "LOAN DOCUMENTS" shall mean and include this Agreement, the
Note(s), and any other documents executed in connection with the Secured
Obligations or the transactions contemplated hereby, as the same may from time
to time be amended, modified, supplemented or restated, PROVIDED, that the Loan
Documents shall NOT include any of the Excluded Agreements.

          1.24 "MATERIAL ADVERSE EFFECT" means a material adverse effect upon:
(i) the business, operations, properties, assets or conditions (financial or
otherwise) of Borrower; or (ii) the ability of Borrower to perform, or of Lender
to enforce, the Secured Obligations.

                                       4
<PAGE>

         1.25 "MATURITY DATE" means the date thirty-six (36) months from the
Advance Date of each installment of the Loan.

         1.26 "PATENT LICENSE" means any written agreement granting any right
with respect to any invention on which a Patent is in existence now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest.

         1.27 "PATENTS" means all of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (a) letters patent of, or rights corresponding thereto in, the United
States or any other county, all registrations and recordings thereof, and all
applications for letters patent of, or rights corresponding thereto in the
United States or any other country, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country; (b) all reissues, continuations,
continuations-in-part or extensions thereof; (c) all petty patents, divisionals,
and patents of addition; and (d) all patents to issue in any such applications.

         1.28 "PERMITTED LIENS" means any and all of the following: (i) liens in
favor of Lender, (ii) liens related to, or arising in connection with, Senior
Debt, (iii) liens related to or arising in connection with Worldcom Network
Services, Inc. and AT&T Corp., (iv) purchase money liens (a) on Equipment
acquired or held by Borrower incurred for financing the acquisition of the
Equipment, (b) existing on Equipment when acquired, if the lien is confined to
the property and improvements and the proceeds of the Equipment, (v) Licenses
granted in the ordinary course of Borrowers business, and (vi) liens incurred in
connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described in clauses (ii), (iii) and (iv) above,
provided, that any extension, renewal or replacement lien shall be limited to
the property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase.

         1.29 "PROCEEDS" means "proceeds," as such term is defined in Section
9306(l) of the UCC and, in any event, shall include, without limitation, (a) any
and all Accounts, Chattel Paper, Instruments, cash or other forms of money or
currency or other proceeds payable to Borrower from time to time in respect of
the Collateral, (b) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to Borrower from time to time with respect to any of the
Collateral, (c) any and all payments (in any form whatsoever) made or due and
payable to Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of
governmental authority), (d) any claim of Borrower against third parties (i) for
past, present or future infringement of any Copyright, Patent or Patent License
or (ii) for past, present or future infringement or dilution of any Trademark or
Trademark License or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License and (e)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.

         1.30 "RECEIVABLES" shall mean and include all of the Borrowers
accounts, instruments, documents, chattel paper and general intangibles whether
secured or unsecured, whether now existing or hereafter created or arising, and
whether or not specifically sold or assigned to Lender hereunder.

                                       5
<PAGE>

          1.31 "SECURED OBLIGATIONS" shall mean and include all principal,
interest, fees, costs, or other liabilities or obligations for monetary amounts
owed by Borrower to Lender, whether due or to become due, matured or unmatured,
liquidated or unliquidated, contingent or non-contingent, and all covenants and
duties regarding such amounts, of any kind of nature, present or future, arising
under this Agreement, the Note(s), or any of the other Loan Documents, whether
or not evidenced by any Note(s), Agreement or other instrument, as the same may
from time to time be amended, modified, supplemented or restated, provided, that
the Secured Obligations shall not include any indebtedness or obligations of
Borrower arising under or in connection with the Excluded Agreements.

          1.32 "SENIOR CREDITOR" means a bank, insurance company, pension fund,
or other accredited lender to be determined, or a syndication of such
institutional lenders that provides Senior Debt financing to Borrower; PROVIDED,
that Senior Creditor shall not include any officer, director, shareholder,
venture capital investor, or insider of Borrower, or any affiliate of the
foregoing persons, except upon the express written consent of Lender.

          1.33 "SENIOR DEBT" means any and all indebtedness and obligations for
borrowed money at any time owing by Borrower to Senior Creditor under the Senior
Loan Documents, including, but not limited to such amounts as may accrue or be
incurred before or after default or workout or the commencement of any
liquidation, dissolution, bankruptcy, receivership or reorganization by or
against Borrower provided, that Senior Debt shall not include debt exceeding
Four Million Dollars ($4,000,000) outstanding at any one time, until the
successful close by the Borrower of its initial public offering, at which time
the Senior Debt ceiling shall be waived by Lender.

          1.34 "SENIOR LOAN DOCUMENTS" means the loan agreement between Borrower
and Senior Creditor and any other agreement, security agreement, document,
promissory note, UCC financing statement, or instrument executed by Borrower in
favor of Senior Creditor pursuant to or in connection with the Senior Debt or
the loan agreement, as the same may from time to time be amended, modified,
supplemented, extended, renewed, restated or replaced.

          1.35 "SUBORDINATION AGREEMENT" means the Subordination Agreement of
even date herewith, entered into between Borrower and Lender for the benefit of
Senior Creditor.

          1.36 "TRADEMARK LICENSE" means any written agreement granting any
right to use any Trademark or Trademark registration now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest.

          1.37 "TRADEMARKS" means any of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (a) any and all trademarks, tradenames, corporate names, business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and any applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or

                                       6
<PAGE>

any other country or any political subdivision thereof and (b) any reissues,
extensions or renewals thereof.

         1.38 "UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Illinois. Unless otherwise defined
herein, terms that are defined in the UCC and used herein shall have the
meanings given to them in the UCC.

         1.39 "WARRANT AGREEMENT(S)" shall mean those agreements entered into in
connection with the Loan, substantially in the form attached hereto as Exhibit
I pursuant to which Borrower granted Lender the right to purchase that number of
shares of Series B Preferred Stock of Borrower as more particularly set forth
therein.

SECTION 2. THE LOAN

         2.1 The outstanding principal amount of the Loan, together with
interest thereon precomputed at the rate of ten (10%) percent per annum, shall
be due and payable in six (6) equal monthly installments of interest only,
payable on the first day of each month, followed by thirty (30) equal monthly
installments of principal and interest, payable on the first day of each month ,
to and including the Maturity Date (each, a "PAYMENT DATE"); provided, however,
that such calculation shall be made such that in no event is interest thereon
prepaid by Borrower. If any payment under the Note(s) shall be payable on a day
other than a business day, then such payment shall be due and payable on the
next succeeding business day.

         2.2 Borrower shall have the option to prepay the Loan, in whole or in
part, at any time after the Closing Date by paying the principal amount thereon
together with all accrued and unpaid interest with respect to such principal
amount, as of the date of such prepayment, without premium.

         2.3 (a) Notwithstanding any provision in this Agreement, the Note(s),
or any other Loan Document, it is not the parties' intent to contract for,
charge or receive interest at a rate that is greater than the maximum rate
permissible by law which a court of competent jurisdiction shall deem applicable
hereto (which under the laws of the State of Illinois shall be deemed to be the
laws relating to permissible rates of interest on commercial loans) (the
"MAXIMUM RATE"). If the Borrower actually pays Lender an amount of interest,
chargeable on the total aggregate principal Secured Obligations of Borrower
under this Agreement and the Note(s) (as said rate is calculated over a period
of time from the date of this Agreement through the end of time that any
principal is outstanding on the Note(s)), which amount of interest exceeds
interest calculated at the Maximum Rate on said principal chargeable over said
period of time, then such excess interest actually paid by Borrower shall be
applied first, to the payment of principal outstanding on the Note(s); second,
after all principal is repaid, to the payment of Lender's out of pocket costs,
expenses, and professional fees which are owed by Borrower to Lender under this
Agreement or the Loan Documents; and third, after all principal, costs,
expenses, and professional fees owed by Borrower to Lender are repaid, the
excess (if any) shall be refunded to Borrower, and the effective rate of
interest will be automatically reduced to the Maximum Rate.

            (b) Upon and during the continuation of an Event of Default
hereunder, all Secured Obligations, including principal, interest, compounded
interest, and professional fees,

                                       7
<PAGE>

shall bear interest at a rate per annum equal to the rate set forth in Section
2.1. plus five percent (5%) per annum ("DEFAULT RATE").

         2.4 If the Borrower has not repaid the outstanding principal amount
under the Loan in its entirety by the Maturity Date (as defined in the
applicable Note(s)), then for each additional month, or portion thereof,
thereafter that the outstanding principal is not paid, Lender shall have the
right to purchase from the Borrower, at the Exercise Price (adjusted, as set
forth and defined in the Warrant Agreement), an additional number of shares of
Preferred Stock which number shall be determined by (i) multiplying the
outstanding principal amount which is due but unpaid by 3% and (ii) dividing the
product thereof by the Exercise Price.

SECTION 3. SECURITY INTEREST

         As security for the prompt, complete and indefeasible payment when due
(whether at stated payment dates or otherwise) of all the Secured Obligations
and in order to induce Lender to make the Loan upon the terms and subject to the
conditions of the Note(s), Borrower hereby assigns, conveys, mortgages, pledges,
hypothecates and transfers to Lender for security purposes only, and hereby
grants to Lender a security interest in, all of Borrower's right, title and
interest in, to and under each of the following (all of which being hereinafter
collectively called the "COLLATERAL"):

         (a)      All Receivables;

         (b)      All Equipment;

         (c)      All Fixtures;

         (d)      All General Intangibles;

         (e)      All Inventory;

         (f)      All other goods and personal property of Borrower whether
                  tangible or intangible and whether now or hereafter owned or
                  existing, leased, consigned by or to, or acquired by, Borrower
                  and wherever located; and

         (g)      To the extent not otherwise included, all Proceeds of each of
                  the foregoing and all accessions to, substitutions and
                  replacements for, and rents, profits and products of each of
                  the foregoing.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF BORROWER

         The Borrower represents, warrants and agrees that;

         4.1 Borrower owns all right title and interest in and to the
Collateral, free of all liens, security interests, encumbrances and claims
whatsoever, except for Permitted Liens.

         4.2 Borrower has the full power and authority to, and does hereby grant
and convey to the Lender, a perfected security interest in the Collateral as
security for the Secured Obligations, free of all liens, security interests,
encumbrances and claims, other than Permitted

                                       8
<PAGE>

Liens and shall execute such Uniform Commercial Code financing statements in
connection herewith as the Lender may reasonably request. Except as set forth
herein, no other lien, security interest, adverse claim or encumbrance has been
created by Borrower or is known by Borrower to exist with respect to any
Collateral.

         4.3 Borrower is a corporation duly organized, legally existing and in
good standing under the laws of the State of Delaware, and is duly qualified as
a foreign corporation in all jurisdictions in which the nature of its business
or location of its properties require such qualifications and where the failure
to be qualified would have a Material Adverse Effect.

         4.4 Borrower's execution, delivery and performance of the Note(s), this
Agreement, all financing statements, all other Loan Documents required to be
delivered or executed in connection herewith, and the Warrant Agreement(s) have
been duly authorized by all necessary corporate action of Borrower, the
individual or individuals executing the Loan Documents and the Warrant
Agreement(s) were duly authorized to do so; and the Loan Documents and the
Warrant Agreement(s) constitute legal, valid and binding obligations of the
Borrower, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization or other similar laws
generally affecting the enforcement of the rights of creditors.

         4.5 With the exception of utility and telecommunication laws, with
which the Borrower is not seeking compliance, which will not have a Material
Adverse Effect on the Company, this Agreement, the other Loan Documents and the
Warrant Agreement(s) do not and will not violate any provisions of Borrower's
Certificate of Incorporation, bylaws or any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which the Borrower is
subject, or result in the creation or imposition of any lien, security interest
or other encumbrance upon the Collateral, other than those created by this
Agreement.

         4.6 With the exception of utility and telecommunication laws with which
the Borrower is not seeking compliance, which will not have a Material Adverse
Effect on the Company, the execution, delivery and performance of this
Agreement, the other Loan Documents and the Warrant Agreement(s) do not require
the consent or approval of any other person or entity including, without
limitation, any regulatory authority or governmental body of the United States
or any state thereof or any political subdivision of the United States or any
state thereof.

         4.7 No event which has had or could reasonably be expected to have a
Material Adverse Effect has occurred and is continuing.

         4.8 No fact or condition exists that would (or would, with the passage
of time, the giving of notice, or both) constitute a default under the Loan
Agreement between Borrower and Senior Creditor.

         4.9 With the exception of the 1997 state tax return for the State of
Connecticut and all 1998 state and federal tax returns, Borrower has filed and
will file all tax returns, federal, state and local, which it is required to
file and has duly paid or fully reserved for all taxes or installments thereof
(including any interest or penalties) as and when due, which have or may become
due pursuant to such returns or pursuant to any assessment received by Borrower
for the three (3) years preceding the Closing Date, if any (including any taxes
being contested in good faith and by appropriate proceedings).

                                       9
<PAGE>

SECTION 5. INSURANCE

         5.1 So long as there are any Secured Obligations outstanding,
Borrower shall cause to be carried and maintained commercial general
liability insurance against risks customarily insured against in Borrower's
line of business. Such risks shall include, without limitation, the risks of
death, bodily injury and property damage. So long as there are any Secured
Obligations outstanding, Borrower shall also cause to be carried and
maintained insurance upon the Collateral and Borrower's business, covering
casualty, hazard and such other property risks in amounts equal to the full
replacement cost of the Collateral. Borrower shall deliver to Lender lender's
loss payable endorsements (Form BFU 438 or equivalent) naming Lender as loss
payee and additional insured. Borrower shall use commercially reasonable
efforts to cause all policies evidencing such insurance to provide for at
least thirty (30) days prior written notice by the underwriter or insurance
company to Lender in the event of cancellation or expiration. Such policies
shall be issued by such insurers and in such amounts as are reasonably
acceptable to Lender.

         5.2 Borrower shall and does hereby indemnify and hold Lender, its
agents and shareholders harmless from and against any and all claims, costs,
expenses, damages and liabilities (including, without limitation, such claims,
costs, expenses, damages and liabilities based on liability in tort, including
without limitation, strict liability in tort), including reasonable attorneys'
fees, arising out of the disposition or utilization of the Collateral, other
than claims arising at or caused by Lender's gross negligence or willful
misconduct.

SECTION 6. COVENANTS OF BORROWER

         Borrower covenants and agrees as follows at all times while any of the
Secured Obligations remain outstanding:

         6.1 Borrower shall furnish to Lender the financial statements listed
hereinafter, each prepared in accordance with generally accepted accounting
principles consistently applied (the "FINANCIAL STATEMENTS"):

                  (a) as soon as practicable (and in any event within thirty
         (30) days) after the end of each month, unaudited interim financial
         statements as of the end of such month (prepared on a consolidated and
         consolidating basis, if applicable), including balance sheet and
         related statements of income and cash flows accompanied by a report
         detailing any material contingencies (including the commencement of any
         material litigation by or against Borrower) or any other occurrence
         that could reasonably be expected to have a Material Adverse Effect,
         all certified by Borrower's Chief Executive Officer or Chief Financial
         Officer to be true and correct;

                  (b) as soon as practicable (and in any event within ninety
         (90) days) after the end of each fiscal year, audited financial
         statements as of the end of such year (prepared on a consolidated and
         consolidating basis, if applicable), including balance sheet and
         related statements of income and cash flows, and setting forth in
         comparative form the corresponding figures for the preceding fiscal
         year, certified by a firm of independent certified public accountants
         selected by borrower and reasonably

                                       10
<PAGE>

         acceptable to Lender, provided that Lender shall agree to the
         engagement of any of the Big 5 firms selected by the Borrower,
         accompanied by any management report from such accountants;

                  (c) promptly after the sending or filing thereof, as the case
         may be, copies of any proxy statements, financial statements or reports
         which Borrower has made available to its shareholders and copies of any
         regular, periodic and special reports or registration statements which
         Borrower files with the Securities and Exchange Commission or any
         governmental authority which may be substituted therefor, or any
         national securities exchange; and

                  (d) promptly, any additional information, financial or
         otherwise (including, but not limited, to tax returns and names of
         principal creditors) as Lender reasonably believes necessary to
         evaluate Borrower's continuing ability to meet its financial
         obligations.

         6.2 Borrower shall permit any authorized representative of Lender and
its attorneys and accountants on reasonable prior notice to inspect, examine and
make copies and abstracts of the books of account and records of Borrower at
reasonable times during normal business hours. In addition, such representative
of Lender and its attorneys and accountants shall have the right to meet with
management and officers, of the Company for a reasonable period of time and on
reasonable prior notice to discuss such books of account and records.

         6.3 Borrower will from time to time execute, deliver and file, alone or
with Lender, any financing statements, security agreements or other documents;
procure any instruments or documents as may be reasonably requested by Lender;
and take all further action that may be necessary or desirable, or that Lender
may reasonably request, to confirm, perfect, preserve and protect the security
interests intended to be granted hereby, and in addition, and for such purposes
only, Borrower hereby authorizes Lender to execute and deliver on behalf of
Borrower and to file such financing statements, security agreement and other
documents without the signature of Borrower either in Lender's name or in the
name of Borrower as agent and attorney-in-fact for Borrower. The parties agree
that a carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in any appropriate office
in lieu thereof.

         6.4 With the exception of the Permitted Liens, Borrower shall protect
and defend Borrower's title as well as the interest of the Lender against all
persons claiming any interest adverse to Borrower or Lender and shall at all
times keep the Collateral free and clear from any legal process, liens or
encumbrances whatsoever (except any placed thereon by Lender) and shall give
Lender immediate written notice thereof.

         6.5 Without Lender's prior written consent, Borrower shall not (a)
grant any material extension of the time of payment of any of the Receivables,
(b) to any material extent, compromise, compound or settle the same for less
than the full amount thereof, (c) release, wholly or partly, any Person liable
for the payment thereof, or allow any credit or discount whatsoever thereon, in
each case other than granted in the ordinary course of business of Borrower and
consistent with past practice.

         6.6 Borrower shall maintain and protect its properties, assets and
facilities, including without limitation, its Equipment and Fixtures, in good
order and working repair and condition

                                       11
<PAGE>

(taking into consideration ordinary wear and tear) and from time to time make or
cause to be made all necessary and proper repairs, renewals and replacements
thereto and shall competently manage and care for its property in accordance
with prudent industry practices.

         6.7 Borrower shall not merge with and into any other entity; or sell or
convey all or substantially all of its assets or stock to any other person or
entity without notifying Lender a minimum of thirty (30) days prior to the
closing date and requesting Lender's consent to the assignment of all of
Borrower's Secured Obligations hereunder to the successor entity in form and
substance satisfactory to Lender. In the event Lender does not consent to such
assignment the parties agree Borrower shall prepay the Loan in accordance with
Section 2.2 hereof.

         6.8 Borrower shall not, without the prior written consent of Lender,
such consent not to be unreasonably withheld, declare or pay any cash dividend
or make a distribution on any class of stock, other than pursuant to employee
repurchase plans upon an employee's death or termination of employment or
transfer, sell, lease, lend or in any other manner convey any equitable,
beneficial or legal interest in any material portion of the assets of Borrower
(except inventory sold in the normal course of business).

         6.9 Upon the request of Lender, Borrower shall, during business hours,
make the Inventory and Equipment available to Lender for inspection at the place
where it is normally located and shall make Borrower's log and maintenance
records pertaining to the Inventory and Equipment available to Lender for
inspection. Borrower shall take all action necessary to maintain such logs and
maintenance records in a correct and complete fashion.

         6.10 Borrower covenants and agrees to pay when due, all taxes, fees or
other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Lender or the
Collateral or upon Borrower's ownership, possession, use, operation or
disposition thereof or upon Borrower's rents, receipts or earnings arising
therefrom. Borrower shall file on or before the due date therefor all personal
property tax returns in respect of the Collateral. Notwithstanding the
foregoing, Borrower may contest, in good faith and by appropriate proceedings,
taxes for which Borrower maintains adequate reserves therefor.

         6.11 Borrower shall not relocate any item of the Collateral (other than
sale of inventory in the ordinary course of business) except: (i) with the prior
written consent of the Lender not to be unreasonably withheld; and (ii) if such
relocation shall be within the continental United States. If permitted to
relocate Collateral pursuant to the foregoing sentence, unless otherwise agreed
in writing by Lender, Borrower shall first (a) cause to be filed and/or
delivered to the Lender all Uniform Commercial Code financing statements,
certificates or other documents or instruments necessary to continue in effect
the perfected security interest of the Lender in the Collateral, and (b) have
given the Lender no less than thirty (30) days prior written notice of such
relocation.

         6.12 Borrower shall grant Lender the firm right to invest up to Five
Hundred Thousand Dollars ($500,000.00), at Lender's sole option, in Borrower's
Series B Preferred Stock Financing, under the same terms, conditions and pricing
as the other investors in the round within sixty (60) days of July 30, 1999,
unless otherwise waived by Borrower.

                                       12
<PAGE>

SECTION 7. CONDITIONS PRECEDENT TO LOAN

         The obligation of Lender to fund the Loan on each Advance Date shall be
subject to Lender's discretion and satisfactory completion of its due diligence
and approval process, and satisfaction by Borrower or waiver by Lender, in
Lender's sole discretion, of the following conditions:

         7.1 (a) The Advance Date for any installment shall occur on or before
September 24, 2000.

             (b) Borrower shall have entered into a Master Lease Agreement and
associated equipment schedules with Lender providing for an aggregate equipment
financing facility of One Million Dollars ($1,000,000), provided that Borrower
shall be under no obligation to utilize such Master Lease Agreement once
established.

         7.2 Document Delivery. Borrower, on or prior to the Closing Date, shall
have delivered to Lender the following:

                  (a) executed originals of the Agreement, the Warrant
         Agreement, and any documents reasonably required by Lender to
         effectuate the liens of Lender, with respect to all Collateral;

                  (b) certified copy of resolutions of Borrower's board of
         directors evidencing approval of the borrowing and other transactions
         evidenced by the Loan Documents and the Warrant Agreement(s);

                  (c) certified copies of the Certificate of Incorporation and
          the Bylaws, as amended through the Closing Date, of Borrower;

                  (d) certificate of good standing for Borrower from its state
         of incorporation and similar certificates from all other jurisdictions
         in which it does business and where the failure to be qualified would
         have a Material Adverse Effect;

                  (e) payment of the Facility Fee;

                  (f) such other documents as Lender may reasonably request.

         7.3 ADVANCE REQUEST. Borrower shall:

                  (a) deliver to Lender, at least five (5) business day prior to
the Advance Date, written notice in the form of an Advance Request, or as
otherwise specified by Lender from time to time, specifying the date and amount
of such Advance.

                   (b) deliver executed original Note(s) as set forth in Section
2, as applicable.

                   (c) such other documents as Lender may reasonably request.

         7.4 PERFECTION OF SECURITY INTERESTS. Borrower shall have taken or
caused to be taken such actions requested by Lender to grant Lender a perfected
security interest in the

                                       13
<PAGE>

Collateral, subject only to Permitted Liens. Such actions shall include, without
limitation, the delivery to Lender of all appropriate financing statements,
executed by Borrower, as to the Collateral granted by Borrower for all
jurisdictions as may be necessary or desirable to perfect the security interest
of Lender in such Collateral

         7.5 ABSENCE OF EVENTS OF DEFAULTS. As of the Closing Date or the
Advance Date, no fact or condition exists that would (or would, with the passage
of time, the giving of notice, or both) constitute an Event of Default under
this Agreement or any of the Loan Documents and no fact or condition exists that
would (or would, with the passage of time, the giving of notice, or both)
constitute a default under the Senior Loan Documents between Borrower and Senior
Creditor.

         7.6 MATERIAL ADVERSE EFFECT. As of the Closing Date or the Advance
Date, no event which has had or could reasonably be expected to have a Material
Adverse Effect has occurred and is continuing.

SECTION 8. DEFAULT

         The occurrence of any one or more of the following events (herein
called "EVENTS OF DEFAULT") shall constitute a default hereunder and under the
Note(s) and other Loan Documents:

         8.1 Borrower defaults in the payment of any principal, interest or
other Secured Obligation involving the payment of money under this Agreement,
the Note(s) or any of the other Loan Documents, and such default continues for
more than five (5) days after the due date thereof; or

         8.2 Borrower defaults in the performance of any other covenant or
Secured Obligation of Borrower hereunder or under the Note(s) or any of the
other Loan Documents, and such default continues for more than thirty (30) days
after Lender has given notice of such default to Borrower.

         8.3 Any representation or warranty made herein by Borrower shall prove
to have been false or misleading in any material respect when made; or

         8.4 Borrower shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due, or
shall file a voluntary petition in bankruptcy, or shall file any petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation pertinent to such circumstances, or shall seek
or consent to or acquiesce in the appointment of any trustee, receiver, or
liquidator of Borrower or of all or any substantial part (33-1/3% or more) of
the properties of Borrower; or Borrower or its directors or majority
shareholders shall take any action initiating the dissolution or liquidation of
Borrower; or

         8.5 Sixty (60) days shall have expired after the commencement of an
action by or against Borrower seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, without such action being dismissed or all
orders or proceedings thereunder affecting the operations or the

                                       14
<PAGE>

business of Borrower being stayed; or a stay of any such order or proceedings
shall thereafter be set aside and the action setting it aside shall not be
timely appealed; or Borrower shall file any answer admitting or not contesting
the material allegations of a petition filed against Borrower in any such
proceedings; or the court in which such proceedings are pending shall enter a
decree or order granting the relief sought in any such proceedings; or

         8.6 Sixty (60) days shall have expired after the appointment, without
the consent or acquiescence of Borrower, of any trustee, receiver or liquidator
of Borrower or of all or any substantial part of the properties of Borrower
without such appointment being vacated; or

         8.7 A payment Event of Default by Borrower under any Excluded
Agreement(s), any other promissory note or agreement for borrowed money, or any
other agreement between Borrower and Lender; or

         8.8 The occurrence of any default relating to payment obligations
existing under any lease or other agreement or obligation of Borrower involving
an amount in excess of $100,000.00 or having a Material Adverse Effect; or the
entry of any judgment against Borrower involving an award in excess of
$100,000.00 that would have a Material Adverse Effect, that has not been bonded
or stayed on appeal within thirty (30) days; or

         8.9 The occurrence and continuance of any material default relating to
payment obligations existing under the Senior Loan Documents; or

SECTION 9. REMEDIES

         Upon the occurrence and the continuance of any one or more Events of
Default, Lender, at its option, may declare the Note and all of the other
Secured Obligations to be accelerated and immediately due and payable (PROVIDED,
that upon the occurrence of an Event of Default of the type described in
Sections 8.4 or 8.5, the Note(s) and all of the other Secured Obligations shall
automatically be accelerated and made due and payable without any further act),
whereupon the unpaid principal of and accrued interest on such Note(s) and all
other outstanding Secured Obligations shall become immediately due and payable,
and shall thereafter bear interest at the Default Rate set forth in, and
calculated according to, Section 2.3 (b) of this Agreement. Lender may exercise
all rights and remedies with respect to the Collateral under the Loan Documents
or otherwise available to it under applicable law, including the right to
release, hold or otherwise dispose of all or any part of the Collateral and the
right to occupy, utilize, process and commingle the Collateral.

         Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, apply,
collect, sell in one or more sales, lease or otherwise dispose of, any or all of
the Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as Lender may elect, and any such sale
may be made either at public or private sale at its place of business or
elsewhere. Borrower agrees that any such public or private sale may occur upon
ten (10) calendar days' prior written notice to Borrower. Lender may require
Borrower to assemble the Collateral and make it available to Lender at a place
designated by Lender which is reasonably convenient to Lender and Borrower. The
proceeds of any sale, disposition or other realization upon all or any part of
the Collateral shall be distributed by Lender in the following order of
priorities:

                                       15
<PAGE>

         First, to Lender in an amount sufficient to pay in full Lender's costs
         and professionals' and advisors fees and expenses;

         Second, to Lender in an amount equal to the then unpaid amount of the
         Secured Obligations in such order and priority as Lender may choose in
         its sole discretion; and

         Finally, upon payment in full of all of the Secured Obligations, to
         Borrower or its representatives or as a court of competent jurisdiction
         may direct.

         Lender shall be deemed to have acted reasonably in the custody,
preservation and disposition of any of the Collateral if it complies with the
obligations of a secured party under Section 9207 of the UCC.

         Lender's rights and remedies hereunder are subject to the terms of the
Subordination Agreement.

SECTION 10. MISCELLANEOUS

         10.1 CONTINUATION OF SECURITY INTEREST. This is a continuing Agreement
and the grant of a security interest hereunder shall remain in full force and
effect and all the rights, powers and remedies of Lender hereunder shall
continue to exist until the Secured Obligations are paid in full as the same
become due and payable and until Lender has executed a written termination
statement (which Lender shall execute within a reasonable time after full
payment of the Secured obligations hereunder), reassigning to Borrower, without
recourse, the Collateral and all rights conveyed hereby and returning possession
of the Collateral to Borrower. The rights, powers and remedies of Lender
hereunder shall be in addition to all rights, powers and remedies given by
statute or rule of law and are cumulative. The exercise of any one or more of
the rights, powers and remedies provided herein shall not be construed as a
waiver of or election of remedies with respect to any other rights, powers and
remedies of Lender.

         10.2 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective only to the extent
and duration of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.

         10.3 NOTICE. Except as otherwise provided herein, all notices and
service of process required, contemplated, or permitted hereunder or with
respect to the subject matter hereof shall be in writing, and shall be deemed to
have been validly served, given or delivered upon the earlier of: (i) the first
business day after transmission by facsimile or hand delivery or deposit with an
overnight express service or overnight mail delivery service; or (ii) the third
calendar day after deposit in the United States mails, with proper first class
postage prepaid, and shall be addressed to the party to be notified as follows:

                                       16
<PAGE>

         (a)      IF TO LENDER:
                                 COMDISCO, INC.
                                Legal Department
                           Attention: General Counsel
                              6111 North River Road
                               Rosemont, IL 60018
                            Facsimile: (847) 518-5088

                  WITH A COPY TO:

                        COMDISCO, INC./COMDISCO VENTURES
                              6111 North River Road
                               Rosemont, IL 60018
                            Facsimile: (847) 518-5465

         (b)      IF TO BORROWER:

                               ESSENTIAL.COM, INC.
                          Attention: Mr. Basil Pallone
                      3 Burlington Woods Drive, 4th Floor
                              Burlington, MA 01803
                            Facsimile: (781) 229-9599
                              Phone: (781) 229-9499

                  WITH A COPY TO:

                         TESTA, HURWITZ & THIBEAULT, LLP
                          Attention: Ms. Linda DeRenzo
                                 125 High Street
                                Boston, MA 02110
                            Facsimile: (617) 248-7100
                              Phone: (617) 248-7000

or to such other address as each party may designate for itself by like notice.

         10.4 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the Note(s), and the
other Loan Documents, and the Warrant Agreement(s) constitute the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof and thereof, and supersede and replace in their entirety any prior
proposals, term sheets, letters, negotiations or other documents or agreements,
whether written or oral, with respect to the subject matter hereof or thereof
(including, without limitation, Lender's proposal letter dated July 14, 1999,
all of which are merged herein and therein. None of the terms of this Agreement,
the Note(s), any of the other Loan Documents or Warrant Agreement(s) may be
amended except by an instrument executed by each of the parties hereto.

                                       17
<PAGE>

          10.5 HEADINGS. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.

          10.6 NO WAIVER. The powers conferred upon Lender by this Agreement are
solely to protect its interest in the Collateral and shall not impose any duty
upon Lender to exercise any such powers. No omission, or delay, by Lender at any
time to enforce any right or remedy reserved to it, or to require performance of
any of the terms, covenants or provisions hereof by Borrower at any time
designated, shall be a waiver of any such right or remedy to which Lender is
entitled, nor shall it in any way affect the right of Lender to enforce such
provisions thereafter.

          10.7 SURVIVAL. All agreements, representations and warranties
contained in this Agreement, the Note(s), the other Loan Documents and the
Warrant Agreement(s) or in any document delivered pursuant hereto or thereto
shall be for the benefit of Lender and shall survive the execution and delivery
of this Agreement and the expiration or other termination of this Agreement.

          10.8 SUCCESSOR AND ASSIGNS. The provisions of this Agreement, the
other Loan Documents and the Warrant Agreement(s) shall inure to the benefit of
and be binding on Borrower and its permitted assigns (if any). Borrower shall
not assign its obligations under this Agreement, the Note(s), any of the other
Loan Documents or the Warrant Agreement(s), without Lender's express written
consent, and any such attempted assignment shall be void and of no effect.
Lender may assign, transfer, or endorse its rights hereunder and under the other
Loan Documents or Warrant Agreement(s) without prior notice to Borrower, and all
of such rights shall inure to the benefit of Lender's successors and assigns.

          10.9 FURTHER INDEMNIFICATION. Borrower agrees to pay, and to save
Lender harmless from, any and all liabilities with respect to, or resulting from
any delay in paying, any and all excise, sales or other similar taxes which may
be payable or determined to be payable with respect to any of the Collateral or
in connection with any of the transactions contemplated by this Agreement.

          10.10 GOVERNING LAW. This Agreement, the Note(s), the other Loan
Documents and the Warrant Agreement(s) have been negotiated and delivered to
Lender in the State of Illinois, and shall not become effective until accepted
by Lender in the State of Illinois. Payment to Lender by Borrower of the Secured
Obligations is due in the State of Illinois. This Agreement, the Note(s), the
other Loan Documents and the Warrant Agreement(s) shall be governed by, and
construed and enforced in accordance with, the laws of the State of Illinois,
excluding conflict of laws principles that would cause the application of laws
of any other jurisdiction.

         10.11 CONSENT TO JURISDICTION AND VENUE. All judicial proceedings
arising in or under or related to this Agreement, the Note(s), any of the other
Loan Documents or Warrant Agreement(s) may be brought in any state or federal
court of competent jurisdiction located in the State of Illinois. By execution
and delivery of this Agreement, each party hereto generally and unconditionally:
(a) consents to personal jurisdiction in Cook County, State of Illinois; (b)
waives any objection as to jurisdiction or venue in Cook County, State of
Illinois; (c) agrees not to assert any defense based on lack of jurisdiction or
venue in the aforesaid courts; and (d)

                                       18
<PAGE>

irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement, the Note(s), the other Loan Documents or Warrant
Agreement(s). Service of process on any party hereto in any action arising out
of or relating to this agreement shall be effective if given in accordance with
the requirements for notice set forth in Section 10.3, above and shall be
deemed effective and received as set forth in Section 10.3, above. Nothing
herein shall affect the right to serve process in any other manner permitted by
law or shall limit the right of either party to bring proceedings in the courts
of any other jurisdiction.

         10.12 MUTUAL WAIVER OF JURY TRIAL. Because disputes arising in
connection with complex financial transactions are most quickly and economically
resolved by an experienced and expert person and the parties wish applicable
state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such applicable laws.
EACH OF BORROWER AND LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL
BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSSCLAIM, COUNTERCLAIM, THIRD PARTY
CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, "CLAIMS") ASSERTED BY BORROWER AGAINST
LENDER OR ITS ASSIGNEE AND/OR BY LENDER OR ITS ASSIGNEE AGAINST BORROWER. This
waiver extends to all such Claims, including, without limitation, Claims which
involve persons or entities other than Borrower and Lender; Claims which arise
out of or are in any way connected to the relationship between Borrower and
Lender; and any Claims for damages, breach of contract arising out of this
Agreement, any other Loan Document or any of the Excluded Agreements, specific
performance, or any equitable or legal relief of any kind.

         10.13 CONFIDENTIALITY. Lender acknowledges that certain items of
Collateral, including, but not limited to trade secrets, source codes, customer
lists and certain other items of Intellectual Property, and any Financial
Statements provided pursuant to Section 6 hereof, constitute proprietary and
confidential information of the Borrower (the "CONFIDENTIAL INFORMATION").
Accordingly, Lender agrees that any Confidential Information it may obtain in
the course of acquiring, perfecting or foreclosing on the Collateral or
otherwise provided under this Agreement, provided such Confidential Information
is marked as confidential by Borrower at the time of disclosure, shall be
received in the strictest confidence and will not be disclosed to any other
person or entity in any manner whatsoever, in whole or in part, without the
prior written consent of the Borrower, unless and until Lender has acquired
indefeasible title thereto.

         10.14 COUNTERPARTS. This Agreement and any amendments, waivers,
consents or supplements hereto may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

                   REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

                                       19
<PAGE>

         IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and
delivered this Agreement as of the day and year first above written.

          BORROWER:                      ESSENTIAL.COM, INC.

                                         Signature:   /s/ Akhil Garland
                                                     ---------------------

                                         Print Name:  Akhil Garland
                                                     ---------------------

                                         Title:       President
                                                     ---------------------

ACCEPTED IN ROSEMONT, ILLINOIS:

         LENDER:                     COMDISCO, INC.

                                     Signature:   /s/ James P. Labe
                                                 -----------------------------

                                                  James P. Labe, President
                                     Print Name:  Comdisco Ventures Division
                                                 -----------------------------

                                     Title:      -----------------------------

<PAGE>

                                    EXHIBIT A

                          SUBORDINATED PROMISSORY NOTE

$________________                               DATE:________________________

                                                DUE: ________________________

FOR VALUE RECEIVED, essential.com, inc., a Delaware corporation (the
"Borrower") hereby promises to pay to the order of Comdisco, Inc., a Delaware
corporation (the "Lender") at P.O. Box 91744, Chicago, IL 60693 or such other
place of payment as the holder of this Secured Promissory Note (this "Note")
may specify from time to time in writing, in lawful money of the United
States of America, the principal amount of ____________________ and 00/100
Dollars ($___________) together with interest at ten percent (10%) per annum
from the date of this Note to maturity of each installment on the principal
hereof remaining from time to time unpaid, such principal and interest to be
paid in 36 monthly installments consisting of 6 equal monthly installments of
interest only in the amount of $_______________ each, commencing __________
and on the same day of each month thereafter to and including
________________, follow by 30 equal monthly installments of principal and
interest in the amount of $______________ each, commencing _____________ and
on the same day of each month thereafter to and including ________________,
such installments to be applied first to accrued and unpaid interest and the
balance to unpaid principal. Interest shall be computed on the basis of a
year consisting of twelve months of thirty days each.

This Note is the Note referred to in, and is executed and delivered in
connection with, that certain Subordinated Loan and Security Agreement dated
September 24, 1999 by and between Borrower and Lender (as the same may from time
to time be amended, modified or supplemented in accordance with its terms, the
"Loan Agreement"), and is entitled to the benefit and security of the Loan
Agreement and the other Loan Documents (as defined in the Loan Agreement), to
which reference is made for a statement of all of the terms and conditions
thereof. All terms defined in the Loan Agreement shall have the same definitions
when used herein, unless otherwise defined herein.

THIS NOTE IS EXPRESSLY SUBJECT TO THE TERMS OF THAT CERTAIN SUBORDINATION
AGREEMENT BY AND BETWEEN LENDER AND BORROWER FOR THE BENEFIT OF SENIOR CREDITOR.
IN THE EVENT OF ANY CONTRADICTION OR INCONSISTENCY BETWEEN THIS NOTE AND THE
SUBORDINATION AGREEMENT, THE TERMS OF THE SUBORDINATION AGREEMENT SHALL CONTROL.

The Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest and any other notice as permitted under the UCC or
any applicable law.

<PAGE>

This Note has been negotiated and delivered to Lender and is payable in the
State of Illinois, and shall not become effective until accepted by Lender in
the State of Illinois. This Note shall be governed by and construed and enforced
in accordance with, the laws of the State of Illinois, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.

          BORROWER:                ESSENTIAL.COM, INC.
                                   3 BURLINGTON WOODS DRIVE, 4th FLOOR
                                   BURLINGTON, MA 01803

                                   Signature:________________________________

                                   Print Name:_______________________________

                                   Title:____________________________________

<PAGE>

                                   Exhibit C

                                ADVANCE REQUEST

To:      Lender:                                            Date:______________
         Comdisco, Inc.
         % Comdisco Ventures
         100 Hamilton Avenue, Suite 104A
         Palo Alto, CA 94301
         Attention: Vika Tonga
         (650) 473-0204 facsimile

         Borrower hereby requests from Comdisco, Inc. ("LENDER") an Advance in
the amount of $_________________ on _____________, 1999 (the "ADVANCE DATE")
under that Subordinated Loan and Security Agreement between Borrower and Lender
dated September 24, 1999 (the "AGREEMENT").

         Please:

         (a)      Issue a check payable to Borrower   ______________________

                                       or

         (b)      Wire Funds to Borrower's account    ______________________

                  Bank:_______________________________
                  Address:____________________________
                          ____________________________
                  ABA Number:_________________________
                  Account Number:_____________________
                  Account Name:_______________________

         Borrower hereby affirms that all Representations and Warranties of
Borrower set forth in Section 4 and all Conditions Precedent to Loan set forth
in Section 7 of the Agreement remain true and correct as of the date hereof.

         Executed this __________________ day of _______________, __________ by:

                           BORROWER:         ESSENTIAL.COM, INC.

                                   BY:       _______________________________
                                   TITLE:    _______________________________
                                   PRINT:    _______________________________

                                       21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}]]