Exhibit 10.1

THIRD AMENDMENT TO

CREDIT AGREEMENT, DEEDS OF TRUST AND

ASSIGNMENTS OF RENTS AND LEASES, PLEDGE AGREEMENT,

PLEDGE AGREEMENT OF PARTNERSHIP INTERESTS

(LIMITED PARTNERSHIP INTERESTS), AND CONTINUING GUARANTY

BY AND AMONG

ACR GROUP, INC.

as Borrower,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Lender

and

SUBSIDIARIES OF BORROWER

Listed on the Signature Pages Hereto

Effective as of September 13, 2006

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TABLE OF CONTENTS

 

     Page

ARTICLE I - DEFINITIONS; CONSTRUCTION

   2

Section 1.01

   Defined Terms    2

Section 1.02

   Other Provisions    2

ARTICLE II - AMENDMENTS TO CREDIT AGREEMENT

   3

Section 2.01

   Amendments to Section 1.1 – DEFINITIONS    3

Section 2.02

   Amendments to Section 1.2 – LINE OF CREDIT    4

ARTICLE III - AMENDMENTS TO KATY DEED OF TRUST AND PASADENA DEED OF TRUST

   4

Section 3.01

   Amendment to Katy Deed of Trust    4

Section 3.02

   Amendment to Pasadena Deed of Trust    5

ARTICLE IV - AMENDMENT TO PLEDGE AGREEMENT

   7

Section 4.01

   Amendment to Preliminary Statements    7 ARTICLE V - AMENDMENT TO PLEDGE
AGREEMENT OF PARTNERSHIP INTERESTS (LIMITED PARTNERSHIP INTERESTS)    8

Section 5.01

   Amendment to Preliminary Statements    8

ARTICLE VI - AMENDMENTS TO GUARANTY

   9

Section 6.01

   Amendment to Paragraph 1    9

ARTICLE VII - CONDITIONS

   10

Section 7.01

   Loan Documents    10

Section 7.02

   Corporate Proceedings of Borrower and Guarantors    11

Section 7.03

   Representations and Warranties    11

Section 7.04

   No Default    11

Section 7.05

   No Change.    11

Section 7.06

   Security Instruments    11

Section 7.07

   Other Instruments or Documents    11

Section 7.08

   Fees    11

ARTICLE VIII - MISCELLANEOUS

   12

Section 8.01

   Adoption, Ratification and Confirmation    12

Section 8.02

   Ratification and Affirmation of Guaranty    12

Section 8.03

   Successors and Assigns    12

Section 8.04

   Counterparts; Delivery of Telecopy Signature Pages    12

Section 8.05

   Entire Agreement    12

Section 8.06

   Invalidity    12

Section 8.07

   Titles of Articles, Sections and Subsections    13

Section 8.08

   Governing Law    13

 

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THIRD AMENDMENT TO

CREDIT AGREEMENT, DEEDS OF TRUST AND

ASSIGNMENTS OF RENTS AND LEASES, PLEDGE AGREEMENT,

PLEDGE AGREEMENT OF PARTNERSHIP INTERESTS

(LIMITED PARTNERSHIP INTERESTS), AND CONTINUING GUARANTY

This THIRD AMENDMENT TO CREDIT AGREEMENT, DEEDS OF TRUST AND ASSIGNMENTS OF
RENTS AND LEASES, PLEDGE AGREEMENT, PLEDGE AGREEMENT OF PARTNERSHIP INTERESTS
(LIMITED PARTNERSHIP INTERESTS), AND CONTINUING GUARANTY (this “Amendment”)
executed effective as of the 13th day of September, 2006 (the “Effective Date”),
is entered into by and among ACR GROUP, INC., a corporation formed under the
laws of the State of Texas (“Borrower”), WELLS FARGO BANK, NATIONAL ASSOCIATION
(together with its successors and assigns, “Lender”), and the Subsidiaries of
Borrower set forth on the signature pages hereto (collectively, the
“Guarantors”).

R E C I T A L S:

A. Borrower and Lender are parties to that certain Credit Agreement dated as of
September 7, 2004 (as amended, amended and restated, supplemented or modified
from time to time, the “Credit Agreement”), pursuant to which Lender agreed,
subject to certain terms and conditions, to extend credit to Borrower.

B. Pursuant to the terms and conditions of the Credit Agreement, Borrower
executed and delivered to Lender, among other things, (i) that certain Term Loan
Note dated as of September 7, 2004 in an original principal amount of
$5,000,000.00 (the “Term Note”), (ii) that certain Line of Credit Note dated as
of September 7, 2004 in the maximum principal amount of $30,000,000.00,
(iii) that certain Restated Line of Credit Note dated as of August 31, 2005 in
the maximum principal amount of $35,000,000.00, and (iv) that certain Second
Amended and Restated Line of Credit Note dated June 14, 2006 in the maximum
principal amount of $40,000,000 (the line of credit notes referred to in the
foregoing clauses (i) – (iv), the “Existing Line of Credit Notes”).

C. In connection with its execution of the Credit Agreement and in order to
secure Borrower’s obligations governed thereby, including, without limitation,
under the Term Note and the Existing Line of Credit Notes and all other
promissory notes now or hereafter executed in connection with the Credit
Agreement, Borrower, Subsidiaries of Borrower, and Lender (as applicable)
entered into, among other documents, (i) that certain Deed of Trust and
Assignment of Rents and Leases dated as of September 7, 2004 by Lifetime Filter,
Inc., a Texas corporation and Subsidiary of Borrower as Grantor, and Danny
Oliver as Trustee for the benefit of Lender and that certain Deed of Trust and
Assignment of Rents and Leases dated June 14, 2006 executed by Lifetime Filter,
Inc., a Texas corporation and Subsidiary of Borrower as Grantor and Danny Oliver
as Trustee for the benefit of Lender (collectively, the “Katy Deed of Trust”),
(ii) that certain Deed of Trust and Assignment of Rents and Leases dated as of
September 7, 2004 by ACR Supply, Inc., a Texas corporation and Subsidiary of
Borrower as Grantor, and Danny Oliver as Trustee for the benefit of Lender and
that certain Deed of Trust and Assignment

 

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of Rents and Leases dated as of June 14, 2006 by ACR Supply, L.P., a Texas
limited partnership and Subsidiary of Borrower as Grantor, and Danny Oliver as
Trustee for the benefit of Lender (collectively, the “Pasadena Deed of Trust”),
(iii) that certain Pledge Agreement dated as of September 7, 2004 from Borrower
to Lender, that certain Amended and Restated Pledge Agreement from Borrower to
Lender (collectively, the “Pledge Agreement”), (iv) that certain Pledge
Agreement of Partnership Interests (Limited Partnership Interests) made by ACR
Supply, LLC, a Nevada limited liability company, Westbrook GP, LLC, a Texas
limited liability Company, and Heating and Cooling Supply, LLC, a Nevada limited
liability company, to Lender (the “Pledge Agreement of Partnership Interests”)
and (v) and that certain Continuing Guaranty dated as of September 7, 2004,
executed by the Subsidiaries signatory thereto in favor of Lender and that
certain Continuing Guaranty dated June 14, 2006 executed by the Guarantors and
joined in by the Borrower (collectively the “Guaranty”, and together with the
Katy Deed of Trust, the Pasadena Deed of Trust the Pledge Agreement, and the
Pledge Agreement of Partnership Interests, the “Affected Security Documents”);

D. Borrower has requested, and upon, and subject to, the terms and provisions
hereof, of the Credit Agreement and of the other Loan Documents, Lender has
agreed, to increase the line of credit under the Credit Agreement to a maximum
principal amount of $45,000,000 at any one time outstanding; and

E. In connection therewith, Borrower, Lender and the Guarantors have agreed to
amend the Credit Agreement and the Affected Security Documents; Borrower has
agreed to execute and deliver to Lender a Third Amended and Restated Line of
Credit Note dated as of the date hereof with a face amount of Forty-Five Million
and 00/100 Dollars ($45,000,000.00) payable to the order of Lender (the “Third
Amended and Restated Line of Credit Note” and together with the Existing Line of
Credit Notes and the Term Note, the “Notes”); and Guarantors have agreed to
amend, and ratify, the Guaranty, all in the particulars hereinafter provided.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

ARTICLE I

DEFINITIONS; CONSTRUCTION

Section 1.01 Defined Terms. Terms used herein without definition (including,
without limitation, in the Recitals hereof) shall have the meanings respectively
assigned to such terms in the Credit Agreement.

Section 1.02 Other Provisions. (a) The words “hereby”, “herein”, “hereinafter”,
“hereof”, “hereto” and “hereunder” when used in this Amendment shall refer to
this Amendment as a whole and not to any particular Article, Section, subsection
or provision of this Amendment, unless provided to the contrary.

(b) Section, subsection and Exhibit references herein are to such Sections,
subsections and Exhibits to this Amendment unless otherwise specified.

 

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(c) Whenever the context requires, reference herein made to the single number
shall be understood to include the plural; and likewise, the plural shall be
understood to include the singular. Words denoting gender shall be construed to
include the masculine, feminine and neuter, when such construction is
appropriate; and specific enumeration shall not exclude the general but shall be
construed as cumulative. Definitions of terms defined in the singular or plural
shall be equally applicable to the plural or singular, as the case may be,
unless otherwise expressed.

ARTICLE II

AMENDMENTS TO CREDIT AGREEMENT

Borrower and Lender agree that the Credit Agreement is hereby amended, effective
as of the Effective Date, in the following particulars:

Section 2.01 Amendments to Section 1.1 – DEFINITIONS. (a) The definitions of
“Line of Credit Note” and of “Loan Documents” set forth in Section 1.1(a) of the
Credit Agreement, are hereby respectively amended in their entirety to read as
follows:

“Line of Credit Note” means (i) that certain Third Amended and Restated Line of
Credit Note dated as of September 13, 2006 made by Borrower payable to the order
of the Bank in the maximum principal amount of Forty-Five Million and 00/100
Dollars ($45,000,000.00), (ii) that certain Second Amended and Restated Line of
Credit Note dated as of June 14, 2006 made by Borrower payable to the order of
the Bank in the maximum principal amount of Forty Million and 00/100 Dollars
($40,000,000.00), (iii) that certain Restated Line of Credit Note dated as of
August 31, 2005 made by Borrower payable to the order of the Bank in the maximum
principal amount of Thirty-Five Million and 00/100 Dollars ($35,000,000.00), and
(iv) that certain Line of Credit Note dated as of September 7, 2004 made by
Borrower payable to the order of the Bank in the maximum principal amount of
Thirty Million and 00/100 Dollars ($30,000,000.00), and any amendments and
modifications to any of the foregoing, any substitutions therefor, and any
replacements, restatements, renewals or extensions , in whole or in part, of any
of the foregoing.

“Loan Documents” means, collectively, this Agreement, the Term Loan Note, the
Line of Credit Note, the Guaranty, the Security Agreement, the Pledge Agreement,
the Pledge Agreement of Partnership Interests, the Deeds of Trust, the First
Amendment, the Second Amendment and the Third Amendment and each other document,
instrument, certificate and agreement now or hereafter executed and delivered by
the Borrower or any Subsidiary thereof, including, without limitation, any and
all interest rate swap or similar agreements, in connection with this Agreement
or otherwise referred to herein or contemplated hereby, all as may be amended,
restated, amended and restated, supplemented, renewed, extended or otherwise
modified from time to time and including any document instrument or other
agreement given in renewal or substitution for any of the foregoing.

 

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(b) Section 1.1(a) of the Credit Agreement is hereby amended by adding the
following definition thereto:

“Third Amendment” means that certain Third Amendment to Credit Agreement, Deeds
of Trust and Assignments of Rents and Leases, Pledge Agreement, Pledge Agreement
of Partnership Interests (Limited Partnership Interests), and Continuing
Guaranty dated as of September 13, 2006 by and among Borrower, the Subsidiaries
and Bank.

Section 2.02 Amendments to Section 1.2 – LINE OF CREDIT. Section 1.2(a) of the
Credit Agreement is hereby amended by deleting the first sentence of
Section 1.2(a) and replacing it with the following sentence:

“Subject to the terms and conditions of this Agreement, Bank hereby agrees to
make advances to Borrower from time to time up to and including the Termination
Date (howsoever occurring), in an aggregate principal amount not to exceed at
any time outstanding Forty-Five Million and 00/100 Dollars ($45,000,000.00)
(“Line of Credit”), the proceeds of which shall be used only for general
business purposes of the Borrower and its Subsidiaries, including working
capital and routine capital expenditures made in the ordinary course of
business, the repurchase of Stock as set forth in Section 5.10 below, and for no
other purpose.”

ARTICLE III

AMENDMENTS TO KATY DEED OF TRUST

AND PASADENA DEED OF TRUST

Section 3.01 Amendment to Katy Deed of Trust. The Katy Deed of Trust is hereby
amended by deleting Section 2.1(a) in its entirety and replacing it with the
following:

“(a) payment to Beneficiary of all sums at any time owing and performance of all
other obligations arising under or in connection with that certain (i) Line of
Credit Note dated as of September 7, 2004, in the maximum principal amount of
Thirty Million and 00/100 Dollars ($30,000,000.00), with interest as provided
therein, executed by ACR Group, Inc. and payable to Beneficiary or its order,
and maturing on August 31, 2006 (as renewed, extended, amended, restated,
modified or supplemented from time to time and including all instruments given
in substitution or replacement thereof, the “Line of Credit Note”), together
with the payment and performance of any other indebtedness or obligations
incurred in connection with the credit accommodation evidenced by the Line of
Credit Note, whether or not specifically referenced therein, (ii) Restated Line
of Credit Note dated as of August 31, 2005 in the maximum principal amount of
Thirty-Five Million and 00/100 Dollars ($35,000,000.00), with interest as
provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its
order, and maturing on August 31, 2007 (as renewed, extended, amended, restated,
modified or supplemented from time to time and including all

 

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instruments given in substitution or replacement thereof, the “Restated Line of
Credit Note”), together with the payment and performance of any other
indebtedness or obligations incurred in connection with the credit accommodation
evidenced by the Restated Line of Credit Note, whether or not specifically
referenced therein, (iii) Second Amended and Restated Line of Credit Note dated
as of June 14, 2006 in the maximum principal amount of Forty Million and 00/100
Dollars ($40,000,000.00), with interest as provided therein, executed by ACR
Group, Inc. and payable to Beneficiary or its order, and maturing on August 31,
2008 (as renewed, extended, amended, restated, modified or supplemented from
time to time and including all instruments given in substitution or replacement
thereof, the “Second Amended and Restated Line of Credit Note”), together with
the payment and performance of any other indebtedness or obligations incurred in
connection with the credit accommodation evidenced by the Second Amended and
Restated Line of Credit Note, whether or not specifically referenced therein,
(iv) Third Amended and Restated Line of Credit Note dated as of September 13,
2006 in the maximum principal amount of Forty-Five Million and 00/100 Dollars
($45,000,000.00), with interest as provided therein, executed by ACR Group, Inc.
and payable to Beneficiary or its order, and maturing on August 31, 2008 (as
renewed, extended, amended, restated, modified or supplemented from time to time
and including all instruments given in substitution or replacement thereof, the
“Third Amended and Restated Line of Credit Note”), together with the payment and
performance of any other indebtedness or obligations incurred in connection with
the credit accommodation evidenced by the Third Amended and Restated Line of
Credit Note, whether or not specifically referenced therein, and (v) the Term
Loan Note dated as of September 7, 2004 in the maximum principal amount of Five
Million and 00/100 Dollars ($5,000,000.00), with interest as provided therein,
executed by ACR Group, Inc. and payable to Beneficiary or its order, and
maturing on August 31, 2008, as amended (as renewed, extended, amended,
restated, modified or supplemented from time to time and including all
instruments given in substitution or replacement thereof, the “Term Note”),
together with the payment and performance of any other indebtedness or
obligations incurred in connection with the credit accommodation evidenced by
the Term Loan Note, whether or not specifically referenced therein (the Line of
Credit Note, the Restated Line of Credit Note, the Second Amended and Restated
Line of Credit Note, the Third Amended and Restated Line of Credit Note and the
Term Loan Note, collectively, the “Notes”) and all other obligations arising
under or pursuant to that certain Credit Agreement dated as of September 7, 2004
by and between Beneficiary and said ACR Group, Inc., as amended from time to
time (the “Credit Agreement”), pursuant to which the Notes are executed or any
of the other “Loan Documents” (as defined in the Credit Agreement).”

Section 3.02 Amendment to Pasadena Deed of Trust. The Pasadena Deed of Trust is
hereby amended by deleting Section 2.1(a) in its entirety and replacing it with
the following:

“(a) payment to Beneficiary of all sums at any time owing and performance of all
other obligations arising under or in connection with that

 

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certain (i) Line of Credit Note dated as of September 7, 2004, in the maximum
principal amount of Thirty Million and 00/100 Dollars ($30,000,000.00), with
interest as provided therein, executed by ACR Group, Inc. and payable to
Beneficiary or its order, and maturing on August 31, 2006 (as renewed, extended,
amended, restated, modified or supplemented from time to time and including all
instruments given in substitution or replacement thereof, the “Line of Credit
Note”), together with the payment and performance of any other indebtedness or
obligations incurred in connection with the credit accommodation evidenced by
the Line of Credit Note, whether or not specifically referenced therein,
(ii) Restated Line of Credit Note dated as of August 31, 2005 in the maximum
principal amount of Thirty-Five Million and 00/100 Dollars ($35,000,000.00),
with interest as provided therein, executed by ACR Group, Inc. and payable to
Beneficiary or its order, and maturing on August 31, 2007 (as renewed, extended,
amended, restated, modified or supplemented from time to time and including all
instruments given in substitution or replacement thereof, the “Restated Line of
Credit Note”), together with the payment and performance of any other
indebtedness or obligations incurred in connection with the credit accommodation
evidenced by the Restated Line of Credit Note, whether or not specifically
referenced therein, (iii) Second Amended and Restated Line of Credit Note dated
as of June 14, 2006 in the maximum principal amount of Forty Million and 00/100
Dollars ($40,000,000.00), with interest as provided therein, executed by ACR
Group, Inc. and payable to Beneficiary or its order, and maturing on August 31,
2008 (as renewed, extended, amended, restated, modified or supplemented from
time to time and including all instruments given in substitution or replacement
thereof, the “Second Amended and Restated Line of Credit Note”), together with
the payment and performance of any other indebtedness or obligations incurred in
connection with the credit accommodation evidenced by the Second Amended and
Restated Line of Credit Note, whether or not specifically referenced therein,
(iv) Third Amended and Restated Line of Credit Note dated as of September 13,
2006 in the maximum principal amount of Forty-Five Million and 00/100 Dollars
($45,000,000.00), with interest as provided therein, executed by ACR Group, Inc.
and payable to Beneficiary or its order, and maturing on August 31, 2008 (as
renewed, extended, amended, restated, modified or supplemented from time to time
and including all instruments given in substitution or replacement thereof, the
“Third Amended and Restated Line of Credit Note”), together with the payment and
performance of any other indebtedness or obligations incurred in connection with
the credit accommodation evidenced by the Third Amended and Restated Line of
Credit Note, whether or not specifically referenced therein, and (v) the Term
Loan Note dated as of September 7, 2004 in the maximum principal amount of Five
Million and 00/100 Dollars ($5,000,000.00), with interest as provided therein,
executed by ACR Group, Inc. and payable to Beneficiary or its order, and
maturing on August 31, 2008, as amended (as renewed, extended, amended,
restated, modified or supplemented from time to time and including all
instruments given in substitution or replacement thereof, the “Term Note”),
together with the payment and performance of any other indebtedness or
obligations incurred in connection

 

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with the credit accommodation evidenced by the Term Loan Note, whether or not
specifically referenced therein (the Line of Credit Note, the Restated Line of
Credit Note, the Second Amended and Restated Line of Credit Note, the Third
Amended and Restated Line of Credit Note and the Term Loan Note, collectively,
the “Notes”) and all other obligations arising under or pursuant to that certain
Credit Agreement dated as of September 7, 2004 by and between Beneficiary and
said ACR Group, Inc., as amended from time to time (the “Credit Agreement”),
pursuant to which the Notes are executed or any of the other “Loan Documents”
(as defined in the Credit Agreement).”

ARTICLE IV

AMENDMENT TO PLEDGE AGREEMENT

Section 4.01 Amendment to Preliminary Statements. (a) The Pledge Agreement is
hereby amended by deleting in its entirety the second paragraph of the
Preliminary Statements set forth therein and replacing the same with the
following:

“WHEREAS, Pledgor and Lender have entered into that certain Credit Agreement
dated as of September 7, 2004, as amended (as may be further amended, restated,
supplemented or otherwise modified from time to time the “Credit Agreement”),
pursuant to which Lender has agreed to extend to Pledgor (i) a revolving line of
credit in an aggregate principal amount not to exceed at any time outstanding
Forty-Five Million and 00/100 Dollars ($45,000,000.00) (as renewed, extended,
amended, restated, modified or supplemented from time to time and including all
instruments given in substitution or replacement thereof, the “Line of Credit”)
and (ii) a term loan in an amount equal to Five Million and 00/100 Dollars
($5,000,000.00) (the “Term Loan”) under the terms, and subject to the
conditions, set forth in the Credit Agreement and, as applicable, the Line of
Credit Note dated September 7, 2004 in the maximum principal amount of
$30,000,000.00 executed by Pledgor payable to the order of Lender (as renewed,
extended, amended, restated, modified or supplemented from time to time and
including all instruments given in substitution or replacement thereof, the
“Line of Credit Note”), the Restated Line of Credit Note dated August 31, 2005
in the maximum principal amount of $35,000,000.00 executed by Pledgor payable to
the order of Lender (as renewed, extended, amended, restated, modified or
supplemented from time to time and including all instruments given in
substitution or replacement thereof, the “Restated Line of Credit Note”), the
Second Amended and Restated Line of Credit Note dated June 14, 2006 in the
maximum principal amount of $40,000,000.00 executed by Pledgor payable to the
order of Lender (as renewed, extended, amended, restated, modified or
supplemented from time to time and including all instruments given in
substitution or replacement thereof, the “Second Amended and Restated Line of
Credit Note”), the Third Amended and Restated Line of Credit Note dated
September 13, 2006 in the maximum principal amount of $45,000,000.00 executed by
Pledgor payable to the order of Lender (as renewed, extended, amended, restated,
modified or supplemented from time to time and including all

 

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instruments given in substitution or replacement thereof, the “Third Amended and
Restated Line of Credit Note”) and the Term Loan Note dated September 7, 2004,
in the original principal amount of $5,000,000.00 executed by Pledgor payable to
the order of Lender, as amended (as renewed, extended, amended, restated,
modified or supplemented from time to time and including all instruments given
in substitution or replacement thereof, the “Term Note” and together with the
Line of Credit Note, the Restated Line of Credit Note, the Second Amended and
Restated Line of Credit Note and the Third Amended and Restated Line of Credit
Note, the “Notes”).”

(b) The Pledge Agreement is hereby amended by deleting in its entirety the fifth
paragraph of the Preliminary Statements set forth therein and replacing the same
with the following:

“WHEREAS, Borrower has requested that Bank increase the line of credit under the
Credit Agreement to Forty-five Million and 00/100 Dollars ($45,000,000.00).”

ARTICLE V

AMENDMENT TO PLEDGE AGREEMENT OF PARTNERSHIP INTERESTS

(LIMITED PARTNERSHIP INTERESTS)

Section 5.01 Amendment to Preliminary Statements. (a) The Pledge Agreement of
Partnership Interests (Limited Partnership Interests) is hereby amended by
deleting the fourth paragraph of the Preliminary Statements set forth therein in
its entirety and replacing the same with the following:

“WHEREAS, Pledgor and Lender have entered into that certain Credit Agreement
dated as of September 7, 2004, as amended (as may be further amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
pursuant to which Lender has agreed to extend to Pledgor (i) a revolving line of
credit in an aggregate principal amount not to exceed at any time outstanding
Forty-Five Million and 00/100 Dollars ($45,000,000.00) (as renewed, extended,
amended, restated, modified or supplemented from time to time and including all
instruments given in substitution or replacement thereof, the “Line of Credit”)
and (ii) a term loan in an amount equal to Five Million and 00/100 Dollars
($5,000,000.00) (the “Term Loan”) under the terms, and subject to the
conditions, set forth in the Credit Agreement and, as applicable, the Line of
Credit Note dated September 7, 2004 in the maximum principal amount of
$30,000,000.00 executed by Pledgor payable to the order of Lender (as renewed,
extended, amended, restated, modified or supplemented from time to time and
including all instruments given in substitution or replacement thereof, the
“Line of Credit Note”), the Restated Line of Credit Note dated August 31, 2005
in the maximum principal amount of $35,000,000.00 executed by Pledgor payable to
the order of Lender (as renewed, extended, amended, restated, modified or
supplemented from time to time and including all instruments given in

 

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substitution or replacement thereof, the “Restated Line of Credit Note”), the
Second Amended and Restated Line of Credit Note dated June 14, 2006 in the
maximum principal amount of $40,000,000.00 executed by Pledgor payable to the
order of Lender (as renewed, extended, amended, restated, modified or
supplemented from time to time and including all instruments given in
substitution or replacement thereof, the “Second Amended and Restated Line of
Credit Note”), the Third Amended and Restated Line of Credit Note dated
September 13, 2006 in the maximum principal amount of $45,000,000.00 executed by
Pledgor payable to the order of Lender (as renewed, extended, amended, restated,
modified or supplemented from time to time and including all instruments given
in substitution or replacement thereof, the “Third Amended and Restated Line of
Credit Note”) and the Term Loan Note dated September 7, 2004, in the original
principal amount of $5,000,000.00 executed by Pledgor payable to the order of
Lender, as amended (as renewed, extended, amended, restated, modified or
supplemented from time to time and including all instruments given in
substitution or replacement thereof, the “Term Note” and together with the Line
of Credit Note, the Restated Line of Credit Note, the Second Amended and
Restated Line of Credit Note and the Third Amended and Restated Line of Credit
Note, the “Notes”).”

(b) The Pledge Agreement of Partnership Interests (Limited Partnership
Interests) is hereby amended by deleting in its entirety the eighth paragraph of
the Preliminary Statements set forth therein and replacing the same with the
following:

“WHEREAS, Borrower has requested that Bank increase the line of credit under the
Credit Agreement to Forty-five Million and 00/100 Dollars ($45,000,000.00).”

ARTICLE VI

AMENDMENTS TO GUARANTY

Section 6.01 Amendment to Paragraph 1. (a) The Guaranty is hereby amended by
deleting the second sentence of Paragraph 1 in its entirety and replacing it
with the following:

“The term “Indebtedness” is used herein in its most comprehensive sense and
includes any and all advances, debts, obligations and liabilities of Borrower,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Borrower may
be liable individually or jointly with others, or whether recovery upon such
Indebtedness may be or hereafter becomes unenforceable including, without
limitation, all “Obligations” as said term is defined in that certain Credit
Agreement dated as September 7, 2004 by and between Borrower and Bank as
amended, amended and restated, modified, supplemented or extended from time to
time, including, without limitation, by that certain First Amendment to Credit
Agreement, Term Loan Note, Line of Credit Note, Security Agreement, Deeds of

 

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Trust and Assignments of Rents and Leases, Pledge Agreement and Continuing
Guaranty dated effective as of August 31, 2005 by and among Bank, Borrower and
the Subsidiaries of Borrower therein set forth, that certain Second Amendment to
Credit Agreement and Term Note executed effective as of June 14, 2006, by and
between Bank and Borrower, and that certain Third Amendment to Credit Agreement,
Deeds of Trust and Assignments of Rents and Leases, Pledge Agreement, Pledge
Agreement of Partnership Interests (Limited Partnership Interests), and
Continuing Guaranty by and between Bank and Borrower and, including, without
limitation all indebtedness owing by Borrower to Bank pursuant to that certain
(i) Line of Credit Note dated as of September 7, 2004 in the maximum principal
amount of $30,000,000.00, (ii) Restated Line of Credit Note dated as of
August 31, 2005 in the maximum amount of $35,000,000.00, (iii) Second Amended
and Restated Line of Credit Note dated as of June 14, 2006 in the maximum
principal amount of $40,000,000.00, (iv) Third Amended and Restated Line of
Credit Note dated as of September 13, 2006 in the maximum principal amount of
$45,000,000.00, and (v) that certain Term Note dated as of September 7, 2004 in
the original principal amount of $5,000,000.00, as amended, each of the
foregoing as renewed, extended, amended, restated, modified or supplemented from
time to time and including all instruments given in substitution or replacement
thereof.”

(b) Amendment to Paragraph 2. The Guaranty is hereby further amended by deleting
the first sentence of Paragraph 2 in its entirety and replacing it with the
following:

“The liability of Guarantors shall not exceed at any time the sum of Fifty
Million and 00/100 Dollars ($50,000,000.00) plus all interest thereon plus
costs, expenses and all other amounts owing pursuant to the Credit Agreement or
any other Loan Document plus all costs and expenses pertaining to the
enforcement of this Guaranty and/or the collection of the Indebtedness of the
Borrower to Bank, provided that the obligations of each Guarantor hereunder
shall be limited to an aggregate amount equal to the largest amount that would
not render its obligations hereunder subject to avoidance under Section 548 of
the United States Bankruptcy Code or any comparable provisions of any applicable
state law.”

ARTICLE VII

CONDITIONS

Section 7.01 Loan Documents. Lender shall have received:

(a) multiple original counterparts of this Amendment executed and delivered by a
duly authorized officer of Borrower; and

(b) an original Third Amended and Restated Line of Credit Note dated as of the
Effective Date reflecting a maximum principal amount of Forty-Five Million and
00/100 Dollars ($45,000,000.00) payable to the order of Lender.

 

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Section 7.02 Corporate Proceedings of Borrower and Guarantors. Lender shall have
received multiple copies of the resolutions, in form and substance reasonably
satisfactory to Lender, of the Boards of Directors of Borrower and the
Guarantors, authorizing the execution, delivery and performance of this
Amendment, each such copy being attached to an original certificate of the
Secretary or an Assistant Secretary of Borrower or the Guarantors, as
applicable, dated as of the Effective Date, certifying (i) that the resolutions
attached thereto are true, correct and complete copies of resolutions duly
adopted by written consents or at meetings of the Boards of Directors, (ii) that
such resolutions constitute all resolutions adopted with respect to the
transactions contemplated hereby, (iii) that such resolutions have not been
amended, modified, revoked or rescinded as of the Effective Date, (iv) that the
respective articles of incorporation and bylaws of Borrower and the Guarantors
have not been amended or otherwise modified since the effective date of the
Credit Agreement, except pursuant to any amendments attached thereto, and (v) as
to the incumbency and signature of the officers of Borrower or the Guarantors,
as applicable, executing this Amendment.

Section 7.03 Representations and Warranties. Each of the representations and
warranties made by Borrower and the Guarantors in or pursuant to the Loan
Documents shall be true and correct as of the Effective Date, as if made on and
as of such date.

Section 7.04 No Default. No Default or Event of Default shall have occurred and
be continuing as of the Effective Date.

Section 7.05 No Change.

(a) No event shall have occurred since May 31, 2006, which, in the reasonable
opinion of Lender, could have a material adverse effect on the condition
(financial or otherwise), business, operations or prospects of Borrower or any
Guarantor.

(b) Neither Borrower nor any of its Subsidiaries shall have sold, leased or
otherwise disposed of any assets or other property since May 31, 2006, except in
the ordinary course of business.

(c) No charge off or write down in excess of $100,000.00 of any assets or other
property of Borrower or any of its Subsidiaries reflected in the most recent
financial statements of Borrower and its Subsidiaries provided to Lender shall
have been taken.

Section 7.06 Security Instruments. Each of the Credit Agreement, the Security
Documents, the Guaranty and all other Loan Documents shall be in full force and
effect and provide to Lender the rights, remedies, benefits and security
intended thereby in the case of the Credit Agreement and the Affected Security
Documents, as amended and supplemented hereby.

Section 7.07 Other Instruments or Documents. Lender shall receive such other
instruments or documents as it may reasonably request.

Section 7.08 Fees. All reasonable fees of Lender’s legal counsel shall be paid
upon execution of this Amendment.

 

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ARTICLE VIII

MISCELLANEOUS

Section 8.01 Adoption, Ratification and Confirmation. Each of Borrower, the
Guarantors and Lender does hereby adopt, ratify and confirm the Credit
Agreement, the Notes and the Affected Security Documents, each as amended
hereby, and acknowledges and agrees that the Credit Agreement, the Notes, and
the Affected Security Documents, each as amended hereby, are and remain in full
force and effect.

Section 8.02 Ratification and Affirmation of Guaranty. Each Guarantor hereby
expressly (i) acknowledges the terms of this Amendment, (ii) ratifies and
affirms its obligations under the Guaranty, as amended, supplemented or
otherwise modified hereby, (iii) acknowledges, renews and extends its continued
liability under the Guaranty, as amended, supplemented or otherwise modified
hereby and agrees that the Guaranty, as amended, supplemented or otherwise
modified hereby remains in full force and effect on and after the execution and
delivery of this Amendment, and (iv) guarantees, and promises to pay, to Lender,
promptly when due all amounts owing or to be owing by it under the Guaranty, as
amended, supplemented or otherwise modified hereby pursuant to, and in
accordance with, its terms and conditions.

Section 8.03 Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted pursuant to the Credit Agreement.

Section 8.04 Counterparts; Delivery of Telecopy Signature Pages. This Amendment
may be executed by one or more of the parties hereto in any number of separate
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument and shall be enforceable as of the
Effective Date upon the execution of one or more counterparts hereof by
Borrower, the Guarantors and Lender. In this regard, each of the parties hereto
acknowledges that a counterpart of this Amendment containing a set of
counterpart executed signature pages reflecting the execution of each party
hereto shall be sufficient to reflect the execution of this Amendment by each
necessary party hereto and shall constitute one instrument. Delivery of an
executed signature page of this Amendment by facsimile transmission shall be
effective as delivery of an original executed signature page of this Amendment.

Section 8.05 Entire Agreement. This Amendment constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof. All prior
understandings, statements and agreements, whether written or oral, relating to
the subject hereof are superseded by this Amendment.

Section 8.06 Invalidity. In the event that any one or more of the provisions
contained in this Amendment shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Amendment.

 

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Section 8.07 Titles of Articles, Sections and Subsections. All titles or
headings to Articles, Sections, Subsections or other divisions of this Amendment
or the exhibits hereto, if any, are only for the convenience of the parties and
shall not be construed to have any effect or meaning with respect to the other
content of such Articles, Sections, Subsections, other divisions or exhibits,
such other content being controlling as the agreement among the parties hereto.

Section 8.08 Governing Law. This Amendment shall be deemed to be a contract made
under and shall be governed by and construed in accordance with the internal
laws of the State of Texas.

THIS AMENDMENT, THE CREDIT AGREEMENT, AS AMENDED HEREBY, THE NOTES AND THE
SECURITY DOCUMENTS, AS AMENDED HEREBY, REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[Remainder of Page Intentionally Left Blank. Signatures on Following Pages.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their proper and duly authorized officers as of the
Effective Date.

 

WELLS FARGO BANK, NATIONAL ASSOCIATION By:  

 

Name:   John Kallina Title:   Vice President ACR GROUP, INC. By:  

 

Name:   Alex Trevino, Jr. Title:   President ACR SUPPLY, LLC By:  

 

Name:   A. Stephen Trevino Title:   President TOTAL SUPPLY, INC. By:  

 

Name:   A. Stephen Trevino Title:   Vice President FLORIDA COOLING SUPPLY, INC.
By:  

 

Name:   A. Stephen Trevino Title:   Vice President

 

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HEATING AND COOLING SUPPLY, LLC By:  

 

Name:   A. Stephen Trevino Title:   Vice President VALLEY SUPPLY, INC. By:  

 

Name:   A. Stephen Trevino Title:   Vice President WEST COAST HVAC SUPPLY, INC.
By:  

 

Name:   A. Stephen Trevino Title:   Vice President ETI TEXAS, INC. By:  

 

Name:   A. Stephen Trevino Title:   Vice President LIFETIME FILTER, INC. By:  

 

Name:   A. Stephen Trevino Title:   Vice President CAC DISTRIBUTORS, INC. By:  

 

Name:   A. Stephen Trevino Title:   Vice President

 

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WESTBROOK GP, LLC By:  

 

Name:   A. Stephen Trevino Title:   Vice President CONTRACTORS HEATING & SUPPLY,
LP By:  

Westbrook GP, LLC,

its sole General Partner

  By:  

 

  Name:   A. Stephen Trevino   Title:   Vice President ACR SUPPLY, LP By:  

Westbrook GP, LLC,

its sole General Partner

  By:  

 

  Name:   A. Stephen Trevino   Title:   Vice President

 

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