Document:

Exhibit
        10.23

    

     

     

    LOAN
      AND SECURITY AGREEMENT

    

    This
      LOAN
      AND SECURITY AGREEMENT dated as of March 22, 2007 (the “Agreement”), is executed
      by and between Primoris Corporation, a Nevada
      corporation (the
      “Borrower”), which has its chief executive office located at 26000 Commercentre
      Drive, Lake Forest, California 92630, and LASALLE BANK NATIONAL ASSOCIATION,
      a
      national banking association (the “Bank”), whose address is 135 South LaSalle
      Street, Chicago, Illinois 60603.

    

    RECITALS:

    

    A. The
      Borrower desires to borrow funds and obtain other financial accommodations
      from
      the Bank.

    

    B. Pursuant
      to the Borrower’s request, the Bank is willing to extend such financial
      accommodations to the Borrower under the terms and conditions set forth
      herein.

    

    C. It
      is the
      parties’ intent that the Borrower and its Affiliates and the Guarantors and
      their Affiliates shall provide security for the Loans and any other borrowings
      by the Borrower and its Affiliates from the Bank and its
      Affiliates.

    

    NOW
      THEREFORE, in consideration of the premises, and the mutual covenants and
      agreements set forth herein, the Borrower agrees to borrow from the Bank, and
      the Bank agrees to lend to the Borrower, subject to and upon the following
      terms
      and conditions:

    

    AGREEMENTS:

    

    Section
      1. DEFINITIONS.

    

    1.1. Defined
      Terms.
      For the
      purposes of this Agreement, the following capitalized words and phrases shall
      have the meanings set forth below.

    

    “Account
      or Accounts”
shall
      have the meaning set forth in the UCC.

     

    “Affiliate”
of
      any
      Person shall mean (a) any other Person which, directly or indirectly, controls
      or is controlled by or is under common control with such Person, (b) any officer
      or director of such Person, and (c) with respect to the Bank, the foregoing
      and
      also any entity administered or managed by the Bank, or an Affiliate or
      investment advisor thereof and which is engaged in making, purchasing, holding
      or otherwise investing in commercial loans. A Person shall be deemed to be
      “controlled by” any other Person if such Person possesses, directly or
      indirectly, power to direct or cause the direction of the management and
      policies of such Person whether by contract, ownership of voting securities,
      membership interests or otherwise.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Applicable
      Margin”
shall
      mean the rate per annum added to the Base Rate and/or LIBOR to determine the
      Revolving Interest Rate as
      determined by the ratio of Total Debt to Tangible Net Worth of the Borrower
      as
      of the last day of the prior fiscal quarter, as set forth below:

    

    
      	
              Total
                Debt to Tangible Net Worth

            	
              LIBOR
                

              Spread

            	
              Base
                Rate Spread

            	
               

              Commitment
                Fee

            	
              Non-Utilization
                Fee

            	
              Letter
                of Credit Fee

            
	
              Greater
                than 1.50 to 1:00

            	
               

              225
                bps

            	
              25
                bps

            	
               

              50
                bps

            	
               

              50
                bps

            	
               

              225
                bps

            
	
              Greater
                than 1.00 to 1.00; less than or equal to 

              1.50
                to 1.00

            	
               

              200
                bps

            	
              25
                bps

            	
               

               

               

              50
                bps

            	
               

               

               

              50
                bps

            	
               

               

               

              200
                bps

            
	
              Greater
                than 0.50 to 1:00; less than or equal to 

              1.00:
                1.00

            	
               

              175
                bps

            	
              0
                bps

            	
               

               

               

              37.5
                bps

            	
               

               

               

              37.5
                bps

            	
               

               

               

              175
                bps

            
	
              Less
                than or equal to 

              0.50
                to 1.00

            	
               

              150
                bps

            	
              0
                bps

            	
               

               

              37.5
                bps

            	
               

               

              37.5
                bps

            	
               

               

              150
                bps

            

    

    

    The
      Applicable Margin as of the date hereof is Base Rate plus 0 bps or LIBOR plus
      175 bps and shall be adjusted, upon receipt and verification of a compliance
      certificate, on the first day of each quarter based on the Total Debt to
      Tangible Net Worth of the Borrower as of the last day of the preceding
      quarter.

    

    “ARB
      ARENDAL”
shall
      mean ARB ARENDAL S. de R.L. de C.V.

    

    “ARB
      ECUADOR”
shall
      mean ARB ECUADOR Cia Ltda.

    

    “Bank
      Product Agreements”
shall
      mean those certain agreements entered into from time to time by the Borrower
      or
      any Subsidiary with the Bank or any Affiliate of the Bank concerning Bank
      Products.

    

    “Bank
      Product Obligations”
shall
      mean (i) all obligations, liabilities, contingent reimbursement obligations,
      fees, and expenses owing by the Borrower or any Subsidiary to the Bank or any
      Affiliate of the Bank, or (ii) all guarantees, fees and expenses owing by the
      Borrower to the Bank with regard to foreign subordinated debt made available
      to
      the Borrower by any Affiliate of the Bank, pursuant to or evidenced by the
      Bank
      Product Agreements and irrespective of whether for the payment of money, whether
      direct or indirect, absolute or contingent, due or to become due, now existing
      or hereafter arising.

    

    “Bank
      Products”
shall
      mean any service or facility extended to the Borrower or any Subsidiary by
      the
      Bank or any Affiliate of the Bank, including: (a) credit cards, (b) credit
      card
      processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions,
      (f) cash management, including controlled disbursement, accounts or services,
      or
      (g) Hedging Agreements.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Bankruptcy
      Code”
shall
      mean the United States Bankruptcy Code, as now existing or hereafter
      amended.

    

    “Base
      Rate”
shall
      mean a per annum rate of interest as announced by the Bank from time to time
      which shall remain fixed during any Interest Period.

    

    “Base
      Rate Loan”
means
      any Loan which bears interest at or by reference to the Base Rate.

     

    “Born
      Heaters Canada”
means
      Born Heaters Canada, Ltd., an Alberta Unlimited Liability Company.

     

    “Business
      Day”
shall
      mean any day other than a Saturday, Sunday or a legal holiday on which banks
      are
      authorized or required to be closed for the conduct of commercial banking
      business in Chicago, Illinois.

    

    “Capital
      Expenditures”
shall
      mean all expenditures (including Capitalized Lease Obligations) which, in
      accordance with GAAP, would be required to be capitalized and shown on the
      consolidated balance sheet of the Borrower, but excluding expenditures made
      in
      connection with the replacement, substitution or restoration of assets to the
      extent financed (i) from insurance proceeds (or other similar recoveries) paid
      on account of the loss of or damage to the assets being replaced or restored
      or
      (ii) with awards of compensation arising from the taking by eminent domain
      or
      condemnation of the assets being replaced.

    

    “Capital
      Lease”
shall
      mean, as to any Person, a lease
      of
      any interest in any kind of property or asset, whether real, personal or mixed,
      or tangible or intangible, by such Person, as lessee, that is, or should be,
      in
      accordance with Financial Accounting Standards Board Statement No. 13, as
      amended from time to time, or, if such statement is not then in effect, such
      statement of GAAP as may be applicable, recorded as a “capital lease” on the
      financial statements of such Person prepared in accordance with
      GAAP.

    

    “Capital
      Securities”
shall
      mean, with respect to any Person, all shares, interests, participations or
      other
      equivalents (however designated, whether voting or non-voting) of such Person’s
      capital, whether now outstanding or issued or acquired after the date hereof,
      including common shares, preferred shares, membership interests in a limited
      liability company, limited or general partnership interests in a partnership
      or
      any other equivalent of such ownership interest.

    

    “Capitalized
      Lease Obligations”
shall
      mean, as to any Person, all rental obligations of such Person, as lessee under
      a
      Capital Lease which are or will be required to be capitalized on the books
      of
      such Person.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Cash
      Equivalent Investment”
shall
      mean, at any time, (a) any evidence of Debt, maturing not more than one year
      after such time, issued or guaranteed by the United States government or any
      agency thereof, (b) commercial paper, maturing not more than one year from
      the
      date of issue, or corporate demand notes, in each case (unless issued by the
      Bank or its holding company) rated at least A-l by Standard & Poor’s Ratings
      Services, a division of The McGraw-Hill Companies, Inc. or P-l by Moody’s
      Investors Service, Inc., (c) any certificate of deposit, time deposit or
      banker’s acceptance, maturing not more than one year after such time, or any
      overnight Federal Funds transaction that is issued or sold by the Bank or its
      holding company (or by a commercial banking institution that is a member of
      the
      Federal Reserve System and has a combined capital and surplus and undivided
      profits of not less than Five Hundred Thousand and 00/100 Dollars
      ($500,000,000)), (d) any repurchase agreement entered into with the Bank, or
      other commercial banking institution of the nature referred to in clause
      (c),
      which
      (i) is secured by a fully perfected security interest in any obligation of
      the
      type described in any of clauses
      (a)
      through
(c)
      above,
      and (ii) has a market value at the time such repurchase agreement is entered
      into of not less than 100% of the repurchase obligation of the Bank, or other
      commercial banking institution, thereunder, (e) money market accounts or mutual
      funds which invest exclusively in assets satisfying the foregoing requirements,
      (f) other short term liquid investments approved in writing by the Bank, (g)
      cash held outside the United States to be deposited in a bank rated at least
      A-l
      by Standard & Poor’s Ratings Services, a division of The McGraw-Hill
      Companies, Inc. or P-l by Moody’s Investors Service, Inc., or any other bank
      acceptable to the Bank; and (h) cash held within the United States to be
      invested in short term instruments for periods of less than 270 days and rated
      at least A-l by Standard & Poor’s Ratings Services, a division of The
      McGraw-Hill Companies, Inc. or P-l by Moody’s Investors Service, Inc., to be
      held in an institution acceptable to the Bank.

    

    “Cash
      Proceeds”
shall
      have the meaning set forth in the UCC.

    

    “Change
      in Control”
shall
      mean if Brian Pratt shall
      cease to own and control, directly or indirectly, at least 50% of the
      outstanding Capital Securities of the Borrower. For the purpose hereof, the
      terms “control” or “controlling” shall mean the possession of the power to
      direct, or cause the direction of, the management and policies of the Borrower
      by contract or voting of securities or ownership interests.

    

    “Chattel
      Paper”
shall
      have the meaning set forth in the UCC.

     

    “Closing
      Fee”
shall
      have the meaning set forth in Section
      3.6
      hereof.

    

    “Collateral”
shall
      have the meaning set forth in Section
      6.1
      hereof.

    

    “Collateral
      Access Agreement”
shall
      mean an agreement in form and substance reasonably satisfactory to the Bank
      pursuant to which a mortgagee or lessor of real property where the chief
      executive office of the Borrower is located or where the chief executive office
      of any Subsidiary is located acknowledges the Liens of the Bank and waives
      any
      Liens held by such Person on such property, and, in the case of any such
      agreement with a mortgagee or lessor, permits the Bank reasonable access to
      and
      use of such real property following the occurrence and during the continuance
      of
      an Event of Default to assemble, complete and sell any collateral stored or
      otherwise located thereon.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Commercial
      Tort Claims”
shall
      have the meaning set forth in the UCC.

     

    “Control
      Agreements”
shall
      mean those agreements in form and substance acceptable to the Bank executed
      by
      the Borrower and any other banking institution(s) in favor of the Bank or any
      Subsidiary and any other banking institution(s) which grants the Bank a security
      interest in the Account(s) held by the Borrower at such other banking
      institution(s) and any Subsidiary at such other banking
      institution(s).

    

    “Debt”
shall
      mean, as to any Person, without duplication, (a) all borrowed money of such
      Person (including principal, interest, fees and charges), whether or not
      evidenced by bonds, debentures, notes or similar instruments; and (b) all
      obligations, contingent or otherwise, with respect to the maximum face amount
      of
      all letters of credit (whether or not drawn), bankers’ acceptances and similar
      obligations issued for the account of such Person (including the Letters of
      Credit), and all unpaid drawings in respect of such letters of credit, bankers’
acceptances and similar obligations. Notwithstanding the foregoing, Debt shall
      not include trade payables and accrued expenses incurred by such Person in
      accordance with customary practices and in the ordinary course of business
      of
      such Person.

    

    “Default
      Rate”
shall
      mean a per annum rate of interest equal to the Base Rate plus
      two
      percent (2%).

    

    “Deposit
      Accounts”
shall
      have the meaning set forth in the UCC.

     

    “Depreciation”
shall
      mean the total amounts added to depreciation, amortization, obsolescence,
      valuation and other proper reserves, as reflected on the Borrower’s financial
      statements and determined in accordance with GAAP.

    

    “Documents”
shall
      have the meaning set forth in the UCC.

     

    “Electronic
      Chattel Paper”
shall
      have the meaning set forth in the UCC.

     

    “Employee
      Plan”
      includes any pension, stock bonus, employee stock ownership plan, retirement,
      profit sharing, deferred compensation, stock option, bonus or other incentive
      plan, whether qualified or nonqualified, or any disability, medical, dental
      or
      other health plan, life insurance or other death benefit plan, vacation benefit
      plan, severance plan or other employee benefit plan or arrangement, including
      those pension, profit-sharing and retirement plans of the Borrower described
      from time to time in the financial statements of the Borrower and any pension
      plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA) or
      any
      multi-employer plan, maintained or administered by the Borrower or to which
      the
      Borrower is a party or may have any liability or by which the Borrower is
      bound.

    

    “Environmental
      Laws”
shall
      mean all present or future federal, state or local laws, statutes, common law
      duties, rules, regulations, ordinances and codes, together with all
      administrative or judicial orders, consent agreements, directed duties,
      requests, licenses, authorizations and permits of, and agreements with, any
      governmental authority, in each case relating to any matter arising out of
      or
      relating to public health and safety, or pollution or protection of the
      environment or workplace, including any of the foregoing relating to the
      presence, use, production, generation, handling, transport, treatment, storage,
      disposal, distribution, discharge, emission, release, threatened release,
      control or cleanup of any Hazardous Substance.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Equipment”
shall
      have the meaning set forth in the UCC.

     

    “ERISA”
shall
      mean the Employee Retirement Income Security Act of 1974, as amended from time
      to time.

    

    “Event
      of Default”
shall
      mean any of the events or conditions which are set forth in Section
      11
      hereof.

    

    “Excess
      Cash”
shall
      mean Cash Equivalent Investments in excess of Five Million and 00/100 Dollars
      ($5,000,000.00).

    

    “Federal
      Funds Rate”
shall
      mean, for any day, a fluctuating interest rate equal for each day during such
      period to the weighted average of the rates on overnight Federal funds
      transactions with members of the Federal Reserve System arranged by Federal
      funds brokers, as published for such day (or, if such day is not a Business
      Day,
      for the next preceding Business Day) by the Federal Reserve Bank of New York,
      or, if such rate is not so published for any day which is a Business Day, the
      average of the quotations for such day on such transactions received by the
      Bank
      from three Federal funds brokers of recognized standing selected by the Bank.
      The Bank’s determination of such rate shall be binding and conclusive absent
      manifest error.

    

    “Financial
      Assets”
shall
      have the meaning set forth in the UCC.

     

    “Fiscal
      Year”
means
      the fiscal year of the Borrower and its Subsidiaries, which period shall be
      the
      12-month period ending on Borrower’s Fiscal Year End of each year. 

     

    “GAAP”
shall
      mean generally accepted accounting principles set forth from time to time in
      the
      opinions and pronouncements of the Accounting Principles Board and the American
      Institute of Certified Public Accountants and statements and pronouncements
      of
      the Financial Accounting Standards Board (or agencies with similar functions
      of
      comparable stature and authority within the U.S. accounting profession), which
      are applicable to the circumstances as of the date of determination, provided,
      however, that interim financial statements or reports shall be deemed in
      compliance with GAAP despite the absence of footnotes and fiscal year-end
      adjustments as required by GAAP.

    

    “General
      Intangibles”
shall
      have the meaning set forth in the UCC.

     

    “Goods”
shall
      have the meaning set forth in the UCC.

     

    “Guarantor”
and
      “Guarantors”
shall
      mean, respectively, each of and collectively, the following Persons: ARB, Inc.;
      ARB Structures, Inc.; Cardinal Contractors, Inc.; Cardinal Mechanical, L.P.;
      Onquest, Inc.; Pipeline Trenching, LLC; and any other Person signing a
      Guaranty.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    “Guaranties”
shall
      have the meaning set forth in Section
      3.1
      hereof.

    

    “Hazardous
      Substances”
shall
      mean (a) any petroleum or petroleum products, radioactive materials,
      asbestos in any form that is or could become friable, urea formaldehyde foam
      insulation, dielectric fluid containing levels of polychlorinated biphenyls,
      radon gas and mold; (b) any chemicals, materials, pollutant or substances
      defined as or included in the definition of “hazardous substances”, “hazardous
      waste”, “hazardous materials”, “extremely hazardous substances”, “restricted
      hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”,
“pollutants” or words of similar import, under any applicable Environmental Law;
      and (c) any other chemical, material or substance, the exposure to, or
      release of which is prohibited, limited or regulated by any governmental
      authority or for which any duty or standard of care is imposed pursuant to,
      any
      Environmental Law.

    

    “Hedging
      Agreement”
shall
      mean any interest rate, currency or commodity swap agreement, cap agreement
      or
      collar agreement, and any other agreement or arrangement designed to protect
      a
      Person against fluctuations in interest rates, currency exchange rates or
      commodity prices.

    

    “Hedging
      Obligation”
shall
      mean, with respect to any Person, any liability of such Person under any Hedging
      Agreement.

    

    “Indemnified
      Party”
and
      “Indemnified
      Parties”
shall
      mean, respectively, each of the Bank and any parent corporation, Affiliate
      or
      Subsidiary of the Bank, and each of their respective officers, directors,
      employees, attorneys and agents, and all of such parties and
      entities.

    

    “Instruments”
shall
      have the meaning set forth in the UCC.

     

    “Intellectual
      Property”
shall
      mean the collective reference to all rights, priorities and privileges relating
      to intellectual property, whether arising under United States, multinational
      or
      foreign laws or otherwise, including copyrights, patents, service marks and
      trademarks, and all registrations and applications for registration therefor
      and
      all licensees thereof, trade names, domain names, technology, know-how and
      processes, and all rights to sue at law or in equity for any infringement or
      other impairment thereof, including the right to receive all proceeds and
      damages therefrom.

    

    “Interest
      Charges”
shall
      mean, for any period, the sum of: (a) all interest, charges and related expenses
      payable with respect to that fiscal period to a lender in connection with
      borrowed money or the deferred purchase price of assets that are treated as
      interest in accordance with GAAP, plus
      (b) the
      portion of Capitalized Lease Obligations with respect to that fiscal period
      that
      should be treated as interest in accordance with GAAP, plus
      (c) all
      charges paid or payable (without duplication) during that period with respect
      to
      any Hedging Agreements.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    “Interest
      Period”
shall
      mean successive one week, two week, one month, two month, three month or six
      month periods, beginning and ending as provided in this Agreement.

    

    “Inventory”
shall
      have the meaning set forth in the UCC.

    

    “Investment”
shall
      mean, with respect to any Person, any investment in another Person, whether
      by
      acquisition of any debt or equity security, by making any loan or advance,
      by
      becoming obligated with respect to a Contingent Liability in respect of
      obligations of such other Person (other than travel and similar advances to
      employees in the ordinary course of business).

    

    “Investment
      Property”
shall
      have the meaning set forth in the UCC.

     

    “Letter
      of Credit”
and
      “Letters
      of Credit”
shall
      mean, respectively, a letter of credit and all such letters of credit issued
      by
      the Bank, in its sole discretion, upon the execution and delivery by the
      Borrower and the acceptance by the Bank of a Master Letter of Credit Agreement
      and a Letter of Credit Application, as set forth in Section
      2.7
      of this
      Agreement.

    

    “Letter
      of Credit Application”
shall
      mean, with respect to any request for the issuance of a Letter of Credit, a
      letter of credit application in the form being used by the Bank at the time
      of
      such request for the type of Letter of Credit requested.

    

    “Letter
      of Credit Commitment”
shall
      mean, at any time, an amount equal to Ten Million and 00/100 Dollars
      ($10,000,000.00).

    

    “Letter
      of Credit Fee”
shall
      have the meaning set forth in Section
      2.6
      hereof.

    

    “Letter
      of Credit Maturity Date”
shall
      mean one year after the Revolving Loan Maturity Date.

    

    “Letter
      of Credit Obligations”
shall
      mean, at any time, an amount equal to the aggregate of the original face amounts
      of all Letters of Credit minus the sum of (i) the amount of any reductions
      in
      the original face amount of any Letter of Credit which did not result from
      a
      draw thereunder, (ii) the amount of any payments made by the Bank with respect
      to any draws made under a Letter of Credit for which the Borrower has reimbursed
      the Bank, (iii) the amount of any payments made by the Bank with respect to
      any
      draws made under a Letter of Credit which have been converted to a Revolving
      Loan as set forth in Section
      2.7,
      and
      (iv) the portion of any issued but expired Letter of Credit which has not been
      drawn by the beneficiary thereunder. For purposes of determining the outstanding
      Letter of Credit Obligations at any time, the Bank’s acceptance of a draft drawn
      on the Bank pursuant to a Letter of Credit shall constitute a draw on the
      applicable Letter of Credit at the time of such acceptance.

    

    “Letter
      of Credit Rights”
shall
      have the meaning set forth in the UCC.

     

    “Liabilities”
shall
      mean at all times all liabilities of the Borrower that would be shown as such
      on
      a balance sheet of the Borrower prepared in accordance with GAAP.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    “LIBOR”
shall
      mean a rate of interest equal to (a) the per annum rate of interest at which
      United States dollar deposits for a period equal to the relevant Interest Period
      are offered in the London Interbank Eurodollar market at 11:00 a.m. (London
      time) two Business Days prior to the commencement of such Interest Period (or
      three Business Days prior to the commencement of such Interest Period if banks
      in London, England were not open and dealing in offshore United States dollars
      on such second preceding Business Day), as displayed in the Bloomberg
      Financial Markets
      system
      (or other authoritative source selected by the Bank in its sole discretion),
      divided by (b) a number determined by subtracting from 1.00 the then stated
      maximum reserve percentage for determining reserves to be maintained by member
      banks of the Federal Reserve System for Eurocurrency funding or liabilities
      as
      defined in Regulation D (or any successor category of liabilities under
      Regulation D), or as LIBOR is otherwise determined by the Bank in its sole
      and
      absolute discretion. The Bank’s determination of LIBOR shall be conclusive,
      absent manifest error.

    

    “LIBOR
      Loan”
or
      “LIBOR
      Loans”
shall
      mean that portion, and collectively those portions, of the aggregate outstanding
      principal balance of the Loans that bear interest at the LIBOR
      Rate.

    

    “LIBOR
      Rate”
shall
      mean a per annum rate of interest equal to LIBOR for the relevant Interest
      Period, plus
      175
      basis points, which LIBOR Rate shall remain fixed during such Interest
      Period.

    

    “Lien”
shall
      mean, with respect to any Person, any interest granted by such Person in any
      real or personal property, asset or other right owned or being purchased or
      acquired by such Person (including an interest in respect of a Capital Lease)
      which secures payment or performance of any obligation and shall include any
      mortgage, lien, encumbrance, title retention lien, charge or other security
      interest of any kind, whether arising by contract, as a matter of law, by
      judicial process or otherwise.

    

    “Loans”
shall
      mean the Revolving Loans made
      by
      the Bank to the Borrower and all Letter of Credit Obligations, under and
      pursuant to this Agreement.

    

    “Loan
      Documents”
shall
      mean each of the agreements, documents, instruments and certificates set forth
      in Section
      3.1
      hereof,
      and any and all such other instruments, documents, certificates and agreements
      from time to time executed and delivered by the Borrower, the Guarantors or
      any
      of their Subsidiaries
      for the benefit of the Bank pursuant to any of the foregoing, and all
      amendments, restatements, supplements and other modifications
      thereto.

    

    “Master
      Letter of Credit Agreement”
shall
      mean, at any time, with respect to the issuance of Letters of Credit, a Master
      Letter of Credit Agreement in the form being used by the Bank at such
      time.

    

    “Material”
shall
      mean the description of any claim which could, if determined adversely, result
      in a Material Adverse Effect.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    “Material
      Adverse Effect”
shall
      mean (a) a material adverse change in, or a material adverse effect upon, the
      assets, business, properties, prospects, condition (financial or otherwise)
      or
      results of operations of the Borrower and its Subsidiaries taken as a whole,
      (b)
      a material impairment of the ability of the Borrower and its Subsidiaries to
      perform any of the Obligations under any of the Loan Documents, or (c) a
      material adverse effect on (i) any substantial portion of the Collateral, (ii)
      the legality, validity, binding effect or enforceability against the Borrower
      and its Subsidiaries of any of the Loan Documents, (iii) the perfection or
      priority of any Lien granted to the Bank under any Loan Document, or (iv) the
      rights or remedies of the Bank under any Loan Document.

    

    “Net
      Income”
shall
      mean, with respect to the Borrower and its Subsidiaries for any period, the
      net
      income (or loss) of the Borrower and its Subsidiaries for such period as
      determined in accordance with GAAP excluding property, plant and equipment,
      any
      extraordinary gains outside the ordinary course and any gains from discontinued
      operations.

    

    “Noncash
      Proceeds”
shall
      have the meaning set forth in the UCC.

     

    “Non-Excluded
      Taxes”
shall
      have the meaning set forth in Section
      2.7(a)
      hereof.

    

    “Non-Utilization
      Fee”
shall
      have the meaning set forth in Section
      2.4
      hereof.

    

    “Note”
shall
      mean the
      Revolving Note.

    

    “Obligations”
shall
      mean the Loans, as evidenced by any Note, all interest accrued thereon
      (including interest which would be payable as post-petition in connection with
      any bankruptcy or similar proceeding, whether or not permitted as a claim
      thereunder), any fees due the Bank hereunder, any expenses incurred by the
      Bank
      hereunder, including without limitation, all liabilities and obligations under
      this Agreement, under any other Loan Document, any reimbursement obligations of
      the Borrower or any Subsidiary of the Borrower in respect of Letters of Credit,
      all Hedging Obligations of the Borrower or any Subsidiary of the Borrower which
      are owed to the Bank or any Affiliate of the Bank, and all Bank Product
      Obligations of the Borrower or any Subsidiary of the Borrower, and any and
      all
      other liabilities and obligations owed by the Borrower or any Subsidiary of
      the
      Borrower to the Bank or any Affiliate of the Bank from time to time, howsoever
      created, arising or evidenced, whether direct or indirect, joint or several,
      absolute or contingent, now or hereafter existing, or due or to become due,
      together with any and all renewals, extensions, restatements or replacements
      of
      any of the foregoing.

    

    “Obligor”
shall
      mean the Borrower, any Subsidiary of the Borrower, any Guarantor, accommodation
      endorser, third party pledgor, or any other party liable with respect to the
      Obligations.

    

    “Organizational
      Identification Number”
means,
      with respect to Borrower, the organizational identification number assigned
      to
      Borrower by the applicable governmental unit or agency of the jurisdiction
      of
      organization of the Borrower.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    “Other
      Taxes”
shall
      mean any present or future stamp or documentary taxes or any other excise or
      property taxes, charges or similar levies which arise from the execution,
      delivery, enforcement or registration of, or otherwise with respect to, this
      Agreement or any of the other Loan Documents.

    

    “Payment
      Intangibles”
shall
      have the meaning set forth in the UCC.

     

    “Permitted
      Liens”
shall
      mean (a) Liens
      for
      Taxes, assessments or other governmental charges not at the time delinquent
      or
      thereafter payable without penalty or being contested in good faith by
      appropriate proceedings and, in each case, for which it maintains adequate
      reserves in accordance with GAAP and in respect of which no Lien has been filed;
      (b) Liens arising in the ordinary course of business (such as (i) Liens of
      carriers, warehousemen, mechanics and materialmen and other similar Liens
      imposed by law, and (ii) Liens in the form of deposits or pledges incurred
      in
      connection with worker’s compensation, unemployment compensation and other types
      of social security (excluding Liens arising under ERISA) or in connection with
      surety bonds, bids, performance bonds and similar obligations) for sums not
      overdue or being contested in good faith by appropriate proceedings and not
      involving any advances or borrowed money or the deferred purchase price of
      property or services, which do not in the aggregate materially detract from
      the
      value of the property or assets of the Borrower or materially impair the use
      thereof in the operation of the Borrower’s business and, in each case, for which
      it maintains adequate reserves in accordance with GAAP and in respect of which
      no Lien has been filed; (c) Liens described on Schedule
      9.2
      as of
      the Closing Date; (d) attachments, appeal bonds, judgments and other similar
      Liens, for sums not exceeding Five Hundred Thousand and 00/100 Dollars
      ($500,000.00) arising in connection with court proceedings, provided
      the
      execution or other enforcement of such Liens is effectively stayed and the
      claims secured thereby are being actively contested in good faith and by
      appropriate proceedings and to the extent such judgments or awards do not
      constitute an Event of Default under Section 11.8 hereof; (e) easements, rights
      of way, restrictions, minor defects or irregularities in title and other similar
      Liens not interfering in any material respect with the ordinary conduct of
      the
      business of the Borrower or any of its Subsidiaries; (f) Liens arising in
      connection with Capitalized Lease Obligations (and attaching only to the
      property being leased); (g) subject to the limitation set forth in Section
      9.1(h),
      Liens
      that constitute purchase money security interests on any property securing
      Debt
      incurred for the purpose of financing all or any part of the cost of acquiring
      such property, provided
      that any
      such Lien attaches to such property within twenty (20) days of the acquisition
      thereof and attaches solely to the property so acquired; (h) Liens
      granted to the Bank hereunder and under the Loan Documents; (i) subject to
      the
      limitations set forth in Section
      10.4,
      Liens
      arising in connection with the incurrence of Capital Expenditures; and (j)
      Liens
      for certain Equipment as approved by the Bank. 

    

    “Person”
shall
      mean any natural person, partnership, limited liability company, corporation,
      trust, joint venture, joint stock company, association, unincorporated
      organization, government or agency or political subdivision thereof, or other
      entity, whether acting in an individual, fiduciary or other
      capacity.

    

    “Pledge
      Agreements”
shall
      have the meaning set forth in Section
      3.2
      hereof.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    “Proceeds”
shall
      have the meaning set forth in the UCC.

     

    “Regulatory
      Change”
shall
      mean the introduction of, or any change in any applicable law, treaty, rule,
      regulation or guideline or in the interpretation or administration thereof
      by
      any governmental authority or any central bank or other fiscal, monetary or
      other authority having jurisdiction over the Bank or its lending
      office.

    

    “Revolving
      Interest Rate”
shall
      mean the Interest Rate plus the Applicable Margin.

    

    “Revolving
      Loan”
and
      “Revolving
      Loans”
shall
      mean, respectively, each loan and all outstanding loans made by the Bank to
      the
      Borrower under and pursuant to this Agreement, as set forth in Section
      2.1
      of this
      Agreement.

    

    “Revolving
      Loan Availability”
shall
      mean, at any time, an amount equal to the Revolving Loan Commitment minus
      the
      Letter of Credit Obligations minus
      outstanding Revolving Loans. 

    

    “Revolving
      Loan Commitment”
shall
      mean Thirty Million and 00/100 Dollars ($30,000,000.00).

    

    “Revolving
      Loan Maturity Date”
shall
      mean  March
      20,
      2010, unless extended by the Bank pursuant to any modification, extension or
      renewal note executed by the Borrower and accepted by the Bank in its sole
      and
      absolute discretion in substitution for the Revolving Note.

    

    “Revolving
      Note”
shall
      mean a revolving note in the form prepared by and acceptable to the Bank, dated
      as of the date hereof, in the amount of the Revolving Loan Commitment and
      maturing on the Revolving Loan Maturity Date, duly executed by the Borrower
      and
      payable to the order of the Bank, together with any and all renewal, extension,
      modification or replacement notes executed by the Borrower and delivered to
      the
      Bank and given in substitution therefor.

    

    “Securities”
shall
      have the meaning set forth in the UCC.

     

    “Senior
      Debt”
shall
      mean all Debt of the Borrower and its Subsidiaries other than Subordinated
      Debt.

    

    “Software”
shall
      have the meaning set forth in the UCC.

     

    “Subordinated
      Debt”
shall
      mean that portion of the Debt of the Borrower which is subordinated to the
      Obligations in a manner satisfactory to the Bank, including right and time
      of
      payment of principal and interest.

    

    “Subsidiary”
and
      “Subsidiaries”
shall
      mean, respectively, with respect to any Person, each and all such corporations,
      partnerships, limited partnerships, limited liability companies, limited
      liability partnerships, joint ventures or other entities of which or in which
      such Person owns, directly or indirectly, such number of outstanding Capital
      Securities as have more than fifty percent (50.00%) of the ordinary voting
      power
      for the election of directors or other managers of such corporation,
      partnership, limited liability company or other entity. Unless the context
      otherwise requires, each reference to Subsidiaries herein shall be a reference
      to Subsidiaries of the Borrower.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    “Supporting
      Obligations”
shall
      have the meaning set forth in the UCC.

     

    “Tangible
      Assets”
shall
      mean the total of all assets appearing on a balance sheet of the Borrower
      prepared in accordance with GAAP (with Inventory being valued at the lower
      of
      cost or market), after deducting all proper reserves (including reserves for
      Depreciation) minus the sum of (i) goodwill, patents, trademarks, prepaid
      expenses, deposits, deferred charges and other personal property which is
      classified as intangible property in accordance with GAAP, and (ii) any amounts
      due from shareholders, officers or employees of the Borrower.

    

    “Tangible
      Net Worth”
shall
      mean at any time the total of Tangible Assets minus
      Liabilities plus
      Subordinated Debt.

    

    “Taxes”
shall
      mean any and all present and future taxes, duties, levies, imposts, deductions,
      assessments, charges or withholdings, and any and all liabilities (including
      interest and penalties and other additions to taxes) with respect to the
      foregoing.

    

    “Total
      Debt”
shall
      mean all Debt of the Borrower and its Subsidiaries, determined on a consolidated
      basis, excluding Debt of the Borrower to Subsidiaries and Debt of Subsidiaries
      to the Borrower or to other Subsidiaries.

    

    “UCC”
shall
      mean the Uniform Commercial Code in effect in the state of Illinois from time
      to
      time.

    

    “Unmatured
      Event of Default”
shall
      mean any event which, with the giving of notice, the passage of time or both,
      would constitute an Event of Default.

    

    “Voidable
      Transfer”
shall
      have the meaning set forth in Section 13.21 hereof. 

    

    “Wholly-Owned
      Subsidiary”
shall
      mean any Subsidiary of which or in which the Borrower owns, directly or
      indirectly, one hundred percent (100%) of the Capital Securities of such
      Subsidiary.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    1.2. Accounting
      Terms.
      Any
      accounting terms used in this Agreement which are not specifically defined
      herein shall have the meanings customarily given them in accordance with GAAP.
      Calculations and determinations of financial and accounting terms used and
      not
      otherwise specifically defined hereunder and the preparation of financial
      statements to be furnished to the Bank pursuant hereto shall be made and
      prepared, both as to classification of items and as to amount, in accordance
      with sound accounting practices and GAAP as used in the preparation of the
      financial statements of the Borrower on the date of this Agreement. If any
      changes in accounting principles or practices from those used in the preparation
      of the financial statements are hereafter occasioned by the promulgation of
      rules, regulations, pronouncements and opinions by or required by the Financial
      Accounting Standards Board or the American Institute of Certified Public
      Accountants (or any successor thereto or agencies with similar functions),
      which
      results in a material change in the method of accounting in the financial
      statements required to be furnished to the Bank hereunder or in the calculation
      of financial covenants, standards or terms contained in this Agreement, the
      parties hereto agree to enter into good faith negotiations to amend such
      provisions so as equitably to reflect such changes to the end that the criteria
      for evaluating the financial condition and performance of the Borrower will
      be
      the same after such changes as they were before such changes; and if the parties
      fail to agree on the amendment of such provisions, the Borrower will furnish
      financial statements in accordance with such changes, but shall provide
      calculations for all financial covenants, perform all financial covenants and
      otherwise observe all financial standards and terms in accordance with
      applicable accounting principles and practices in effect immediately prior
      to
      such changes. Calculations with respect to financial covenants required to
      be
      stated in accordance with applicable accounting principles and practices in
      effect immediately prior to such changes shall be reviewed and certified by
      the
      Borrower’s accountants.

    

    1.3. Other
      Terms Defined in UCC.
      All
      other capitalized words and phrases used herein and not otherwise specifically
      defined herein shall have the respective meanings assigned to such terms in
      the
      UCC, to the extent the same are used or defined therein.

    

    1.4. Other
      Interpretive Provisions.

    

    (a)   
      The
      meanings of defined terms are equally applicable to the singular and plural
      forms of the defined terms. Whenever the context so requires, the neuter gender
      includes the masculine and feminine, the single number includes the plural,
      and
      vice versa, and in particular the word “Borrower” shall be so
      construed.

    

    (b)   
      Section
      and Schedule references are to this Agreement unless otherwise specified. The
      words “hereof”, “herein” and “hereunder” and words of similar import when used
      in this Agreement shall refer to this Agreement as a whole and not to any
      particular provision of this Agreement.

    

    (c)   
      The
      term
“including” is not limiting, and means “including, without
      limitation”.

    

    (d)  
      In
      the
      computation of periods of time from a specified date to a later specified date,
      the word “from” means “from and including”; the words “to” and “until” each mean
“to but excluding”, and the word “through” means “to and
      including”.

    

    (e)   
      Unless
      otherwise expressly provided herein, (i) references to agreements
      (including this Agreement and the other Loan Documents) and other contractual
      instruments shall be deemed to include all subsequent amendments, restatements,
      supplements and other modifications thereto, but only to the extent such
      amendments, restatements, supplements and other modifications are not prohibited
      by the terms of any Loan Document, and (ii) references to any statute or
      regulation shall be construed as including all statutory and regulatory
      provisions amending, replacing, supplementing or interpreting such statute
      or
      regulation.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (f)    
      To
      the
      extent any of the provisions of the other Loan Documents are inconsistent with
      the terms of this Agreement, the provisions of this Agreement shall
      govern.

    

    (g)   
      This
      Agreement and the other Loan Documents may use several different limitations,
      tests or measurements to regulate the same or similar matters. All such
      limitations, tests and measurements are cumulative and each shall be performed
      in accordance with its terms.

    

    Section
      2. COMMITMENT
      OF THE BANK.

    

    2.1. Revolving
      Loans.

    

    (a)   
      Revolving
      Loan Commitment.
      Subject
      to the terms and conditions of this Agreement and the other Loan Documents,
      and
      in reliance upon the representations and warranties of the Borrower set forth
      herein and in the other Loan Documents, the Bank agrees to make such Revolving
      Loans at such times as the Borrower may from time to time request until, but
      not
      including, the Revolving Loan Maturity Date, and in such amounts as the Borrower
      may from time to time request, provided, however, that the aggregate principal
      balance of all Revolving Loans outstanding at any time shall not exceed the
      Revolving Loan Availability. Revolving Loans made by the Bank may be repaid
      and,
      subject to the terms and conditions hereof, borrowed again up to, but not
      including the Revolving Loan Maturity Date unless the Revolving Loans are
      otherwise accelerated, terminated or extended as provided in this Agreement.
      The
      Revolving Loans shall be used by the Borrower for the purpose of working capital
      and general corporate purposes.

    

    (b)  
      Revolving
      Loan Interest and Payments.
      Except
      as otherwise provided in this Section
      2.1(b),
      the
      principal amount of the Revolving Loans outstanding from time to time shall
      bear
      interest at the applicable Revolving Interest Rate. Accrued and unpaid interest
      on the unpaid principal balance of all Revolving Loans outstanding from time
      to
      time which are Base Rate Loans, shall be due and payable on the last Business
      Day of each month. Accrued and unpaid interest on the unpaid principal balance
      of all Revolving Loans outstanding from time to time which are LIBOR Loans
      shall
      be payable on the last Business Day of each Interest Period, commencing on
      the
      first such date to occur after the date hereof, on the date of any principal
      repayment of a LIBOR Loan and on the Revolving Loan Maturity Date. From and
      after maturity, or after the occurrence and during the continuation of an Event
      of Default, interest on the outstanding principal balance of the Revolving
      Loans, at the option of the Bank, may accrue at the Default Rate and shall
      be
      payable upon demand from the Bank.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (c)   
      Revolving
      Loan Principal Payments.

    

    (i)   
      Revolving
      Loan Mandatory Payments.
      All
      Revolving Loans hereunder shall be repaid by the Borrower on the Revolving
      Loan
      Maturity Date, unless payable sooner pursuant to the provisions of this
      Agreement. In the event the aggregate outstanding principal balance of all
      Revolving Loans and Letter of Credit Obligations hereunder exceeds the Revolving
      Loan Availability, the Borrower shall, without notice or demand of any kind,
      immediately make such repayments of the Revolving Loans or take such other
      actions as are satisfactory to the Bank as shall be necessary to eliminate
      such
      excess. 

    

    (ii)  
      Optional
      Prepayments.
      The
      Borrower may from time to time prepay the Revolving Loans which are Base Rate
      Loans, in whole or in part, without any prepayment penalty whatsoever, provided
      that any prepayment of the entire principal balance of the Base Rate Loans
      shall
      include accrued interest on such Base Rate Loans to the date of such
      prepayment.

    

    2.2. Additional
      LIBOR Loan Provisions.

    

    (a)   
      LIBOR
      Loan Prepayments.
      Notwithstanding anything to the contrary contained herein, the principal balance
      of any LIBOR Loan may not be prepaid in whole or in part at any time. If, for
      any reason, a LIBOR Loan is paid prior to the last Business Day of any Interest
      Period, whether voluntary, involuntary, by reason of acceleration or otherwise,
      each such prepayment of a LIBOR Loan will be accompanied by the amount of
      accrued interest on the amount prepaid and any and all costs, expenses,
      penalties and charges incurred by the Bank as a result of the early termination
      or breakage of a LIBOR Loan, plus the amount, if any, by which (i) the
      additional interest which would have been payable during the Interest Period
      on
      the LIBOR Loan prepaid had it not been prepaid, exceeds (ii) the interest which
      would have been recoverable by the Bank by placing the amount prepaid on deposit
      in the domestic certificate of deposit market, the eurodollar deposit market,
      or
      other appropriate money market selected by the Bank, for a period starting
      on
      the date on which it was prepaid and ending on the last day of the Interest
      Period for such LIBOR Loan. The amount of any such loss or expense payable
      by
      the Borrower to the Bank under this section shall be determined in the Bank’s
      sole discretion based upon the assumption that the Bank funded its loan
      commitment for LIBOR Loans in the London Interbank Eurodollar market and using
      any reasonable attribution or averaging methods which the Bank deems appropriate
      and practical, provided, however, that the Bank is not obligated to accept
      a
      deposit in the London Interbank Eurodollar market in order to charge interest
      on
      a LIBOR Loan at the LIBOR Rate.

    

    (b)   
      LIBOR
      Unavailability.
      If the
      Bank determines in good faith (which determination shall be conclusive, absent
      manifest error) prior to the commencement of any Interest Period that (i) the
      making or maintenance of any LIBOR Loan would violate any applicable law, rule,
      regulation or directive, whether or not having the force of law, (ii) United
      States dollar deposits in the principal amount, and for periods equal to the
      Interest Period for funding any LIBOR Loan are not available in the London
      Interbank Eurodollar market in the ordinary course of business, (iii) by reason
      of circumstances affecting the London Interbank Eurodollar market, adequate
      and
      fair means do not exist for ascertaining the LIBOR Rate to be applicable to
      the
      relevant LIBOR Loan, or (iv) the LIBOR Rate does not accurately reflect the
      cost
      to the Bank of a LIBOR Loan, the Bank shall promptly notify the Borrower thereof
      and, so long as the foregoing conditions continue, none of the Loans may be
      advanced as a LIBOR Loan thereafter. In addition, at the Borrower’s option, each
      existing LIBOR Loan shall be immediately (i) converted to a Base Rate Loan
      on
      the last Business Day of the then existing Interest Period, or (ii) due and
      payable on the last Business Day of the then existing Interest Period, without
      further demand, presentment, protest or notice of any kind, all of which are
      hereby waived by the Borrower.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (c)   
      Regulatory
      Change.
      In
      addition, if, after the date hereof, a Regulatory Change shall, in the
      reasonable determination of the Bank, make it unlawful for the Bank to make
      or
      maintain the LIBOR Loans, then the Bank shall promptly notify the Borrower
      and
      none of the Loans may be advanced as a LIBOR Loan thereafter. In addition,
      at
      the Borrower’s option, each existing LIBOR Loan shall be immediately (i)
      converted to a Base Rate Loan on the last Business Day of the then existing
      Interest Period or on such earlier date as required by law, or (ii) due and
      payable on the last Business Day of the then existing Interest Period or on
      such
      earlier date as required by law, all without further demand, presentment,
      protest or notice of any kind, all of which are hereby waived by the
      Borrower.

    

    (d)   
      LIBOR
      Indemnity.
      If any
      Regulatory Change, or compliance by the Bank or any Person controlling the
      Bank
      with any request or directive of any governmental authority, central bank or
      comparable agency (whether or not having the force of law) shall (a) impose,
      modify or deem applicable any assessment, reserve, special deposit or similar
      requirement against assets held by, or deposits in or for the account of or
      loans by, or any other acquisition of funds or disbursements by, the Bank;
      (b)
      subject the Bank or any LIBOR Loan to any tax, duty, charge, stamp tax or fee
      or
      change the basis of taxation of payments to the Bank of principal or interest
      due from the Borrower to the Bank hereunder (other than a change in the taxation
      of the overall net income of the Bank); or (c) impose on the Bank any other
      condition regarding such LIBOR Loan or the Bank’s funding thereof, and the Bank
      shall determine (which determination shall be conclusive, absent manifest error)
      that the result of the foregoing is to increase the cost to, or to impose a
      cost
      on, the Bank or such controlling Person of making or maintaining such LIBOR
      Loan
      or to reduce the amount of principal or interest received by the Bank hereunder,
      then the Borrower shall pay to the Bank or such controlling Person, on demand,
      such additional amounts as the Bank shall, from time to time, determine are
      sufficient to compensate and indemnify the Bank for such increased cost or
      reduced amount.

    

    2.4 Interest
      and Fee Computation; Collection of Funds.
      Except
      as otherwise set forth herein, all interest and fees shall be calculated on
      the
      basis of a year consisting of 360 days and shall be paid for the actual number
      of days elapsed. Principal payments submitted in funds not immediately available
      shall continue to bear interest until collected. If any payment to be made
      by
      the Borrower hereunder or under any Note shall become due on a day other than
      a
      Business Day, such payment shall be made on the next succeeding Business Day
      and
      such extension of time shall be included in computing any interest in respect
      of
      such payment. Notwithstanding anything to the contrary contained herein, the
      final payment due under any of the Loans must be made by wire transfer or other
      immediately available funds. All payments made by the Borrower hereunder or
      under any of the Loan Documents shall be made without setoff, counterclaim,
      or
      other defense. To the extent permitted by applicable law, all payments hereunder
      or under any of the Loan Documents (including any payment of principal,
      interest, or fees) to, or for the benefit, of any Person shall be made by the
      Borrower free and clear of, and without deduction or withholding for, or account
      of, any taxes now or hereinafter imposed by any taxing authority. The
      Borrower pay the Bank a
      Non-Utilization
      Fee
      as
      per the Applicable Margin, which Non-Utilization
      Fee
      shall
      be (A) calculated on
      the
      basis of a year consisting of 360 days, (B) paid for the actual number of days
      elapsed, and (C) payable
      quarterly in arrears on the last day of each March, June, September and
      December, commencing on March 31, 2007, and on the Revolving Loan Maturity
      Date.
      Issued but undrawn Letters of Credit will count as utilization for the purposes
      of calculating the Non-Utilization Fee.

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    2.5. Letters
      of Credit.
      Subject
      to the terms and conditions of this Agreement and upon (i) the execution by
      the
      Borrower and the Bank of a Master Letter of Credit Agreement in form and
      substance acceptable to the Bank (together with all amendments, modifications
      and restatements thereof, the “Master Letter of Credit Agreement”), and (ii) the
      execution and delivery by the Borrower, and the acceptance by the Bank, in
      its
      sole and absolute discretion, of a Letter of Credit Application, the Bank agrees
      to issue for the account of the Borrower such Letters of Credit in the standard
      form of the Bank and otherwise in form and substance acceptable to the Bank,
      from time to time during the term of this Agreement, provided that the Letter
      of
      Credit Obligations may not at any time exceed the Letter of Credit Commitment
      and provided further, that no Letter of Credit shall have an expiration date
      later than the Letter of Credit Maturity Date. The amount of any payments made
      by the Bank with respect to draws made by a beneficiary under a Letter of Credit
      for which the Borrower has failed to reimburse the Bank upon the earlier of
      (i)
      the Bank’s demand for repayment, or (ii) five (5) days from the date of such
      payment to such beneficiary by the Bank, shall be deemed to have been converted
      to a Revolving Loan as of the date such payment was made by the Bank to such
      beneficiary. Upon the occurrence of an Event of a Default and at the option
      of
      the Bank, all Letter of Credit Obligations shall be converted to Revolving
      Loans
      consisting of Base Rate Loans, all without demand, presentment, protest or
      notice of any kind, all of which are hereby waived by the Borrower. To the
      extent the provisions of the Master Letter of Credit Agreement differ from,
      or
      are inconsistent with, the terms of this Agreement, the provisions of this
      Agreement shall govern. The Borrower shall pay the Bank a Letter of Credit
      Fee
      as per the Applicable Margin.

    

    2.6. Taxes.

    

    (a)   
      All
      payments made by the Borrower under this Agreement shall be made free and clear
      of, and without deduction or withholding for or on account of, any present
      or
      future income, stamp or other taxes, levies, imposts, duties, charges, fees,
      deductions or withholdings, now or hereafter imposed, levied, collected,
      withheld or assessed by any governmental authority, excluding net income taxes
      and franchise taxes (imposed in lieu of net income taxes) imposed on the Bank
      as
      a result of a present or former connection between the Bank and the jurisdiction
      of the governmental authority imposing such tax or any political subdivision
      or
      taxing authority thereof or therein (other than any such connection arising
      solely from the Bank having executed, delivered or performed its obligations
      or
      received a payment under, or enforced, this Agreement or any other Loan
      Document). If any such non-excluded taxes, levies, imposts, duties, charges,
      fees, deductions or withholdings (collectively, “Non-Excluded Taxes”) or Other
      Taxes are required to be withheld from any amounts payable to the Bank
      hereunder, the amounts so payable to the Bank shall be increased to the extent
      necessary to yield to the Bank (after payment of all Non-Excluded Taxes and
      Other Taxes) interest or any such other amounts payable hereunder at the rates
      or in the amounts specified in this Agreement, provided, however, that the
      Borrower shall not be required to increase any such amounts payable to the
      Bank
      with respect to any Non-Excluded Taxes that are attributable to the Bank’s
      failure to comply with the requirements of subsection 2.7(c).

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (b)   
      The
      Borrower shall pay any Other Taxes to the relevant governmental authority in
      accordance with applicable law.

    

    (c)   
      At
      the
      request of the Borrower and at the Borrower’s sole cost, the Bank shall take
      reasonable steps to (i) contest its liability for any Non-Excluded Taxes or
      Other Taxes that have not been paid, or (ii) seek a refund of any Non-Excluded
      Taxes or Other Taxes that have been paid.

    

    (d)   
      Whenever
      any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly
      as possible thereafter the Borrower shall send to the Bank a certified copy
      of
      an original official receipt received by the Borrower showing payment thereof.
      If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due
      to
      the appropriate taxing authority or fails to remit to the Bank the required
      receipts or other required documentary evidence or if any governmental authority
      seeks to collect a Non-Excluded Tax or Other Tax directly from the Bank for
      any
      other reason, the Borrower shall indemnify the Bank on an after-tax basis for
      any incremental taxes, interest or penalties that may become payable by the
      Bank.

    

    (e)   
      The
      agreements in this Section shall survive the satisfaction and payment of the
      Obligations and the termination of this Agreement.

     

    2.7. All
      Loans to Constitute Single Obligation.
      The
      Loans shall constitute one general obligation of the Borrower, and shall be
      secured by Bank’s priority security interest in and Lien upon all of the
      Collateral and by all other security interests, Liens, claims and encumbrances
      heretofore, now or at any time or times hereafter granted by the Borrower and/or
      any Subsidiary to Bank.

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    Section
      3. CONDITIONS
      OF BORROWING.

    

    Notwithstanding
      any other provision of this Agreement, the Bank shall not be required to
      disburse, make or continue all or any portion of the Loans, if any of the
      following conditions shall have occurred.

    

    3.1. Loan
      Documents.
      The
      Borrower shall have failed to execute and deliver to the Bank any of the
      following Loan Documents, all of which must be satisfactory to the Bank and
      the
      Bank’s counsel in form, substance and execution:

    

    (a)   
      Loan
      Agreement.
      Two
      copies of this Agreement duly executed by the Borrower.

    

    (b)   
      Revolving
      Note.
      A
      Revolving Note duly executed by the Borrower, in the form prepared by and
      acceptable to the Bank.

    

    (c)   
      Master
      Letter of Credit Agreement.
      A
      Master Letter of Credit Agreement prepared by and acceptable to the Bank, duly
      executed by the Borrower in favor of the Bank.

    

    (d)   
      Guaranties.
      Separate continuing unconditional joint and several Guaranties executed by
      each
      of the Guarantors to and for the benefit of the Bank.

    

    (e)   
      Security
      Agreements.
      Security Agreements executed by each of the Guarantors to and for the benefit
      of
      the Bank.

    

    (f)   
      Collateral
      Access Agreements. 
      Collateral Access Agreements with respect to all properties with Stockdale
      Investment Group, Inc. as the landlord and commercially reasonable efforts
      to
      deliver by Closing a Collateral Access Agreement with respect to the Borrower’s
      chief executive offices.

    

    (g)   
      UCC
      Financing Statements.
      UCC
      Financing Statements which grant to Bank, upon filing in the appropriate
      locations, a first perfected security interest in the Collateral and UCC
      Financing Statements which grant to Bank, upon filing in the appropriate
      locations, a first perfected security interest in certain collateral, as
      determined by the Bank, of the Guarantors.

    

    (h)   
      Search
      Results; Lien Terminations.
      Copies
      of UCC search reports dated such a date as is reasonably acceptable to the
      Bank,
      listing all effective financing statements which name the Borrower and any
      of
      its Subsidiaries under
      their present names and any previous names, as debtors, together with (i) copies
      of such financing statements, (ii) payoff letters evidencing repayment in full
      of all existing Debt to be repaid with the Loans, the termination of all
      agreements relating thereto and the release of all Liens granted in connection
      therewith, with UCC or other appropriate termination statements and documents
      effective to evidence the foregoing (other than Permitted Liens), (iii) such
      other UCC termination statements as the Bank may reasonably request and (iv)
      copies of tax lien and pending suit and judgment search
      reports.

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    (i)    
      Organizational
      and Authorization Document.
      Copies
      of (i) the Articles of Incorporation and Bylaws of
      the
      Borrower and each of its Subsidiaries; (ii) resolutions of the board of
      directors of
      the
      Borrower and each of its Subsidiaries approving and authorizing such Person’s
      execution, delivery and performance of the Loan Documents to which it is party
      and the transactions contemplated thereby; (iii) signature and incumbency
      certificates of the officers of the Borrower and each of its Subsidiaries,
      executing any of the Loan Documents, each of which the Borrower hereby certifies
      to be true and complete, and in full force and effect without modification,
      it
      being understood that the Bank may conclusively rely on each such document
      and
      certificate until formally advised by the Borrower of any changes therein;
      and
      (iv) good standing certificates in the state of incorporation of the Borrower
      and each of its Subsidiaries and in each other state requested by the
      Bank.

    

    (j)     Closing
      Fee.
      The
      Borrower shall have failed to pay to the Bank the Closing Fee in the amount
      of
      Seventy-Five Thousand and
      00/100 Dollars ($75,000.00) payable at Closing.

    

    (k)   
      Insurance.
      Evidence satisfactory to the Bank of the existence of insurance required to
      be
      maintained pursuant to Section
      8.6,
      together with evidence that the Bank has been named as a lender’s loss payee on
      all related insurance policies. 

    

    (l)    
      Opinion
      of Counsel to the Borrower.
      An
      opinion of counsel to the Borrower in form and substance acceptable to the
      Bank.

    

    (m)  
      Payoff
      Letters.
      Payoff
      letters to other lenders of Borrower in form and substance acceptable to the
      Bank.

    

    (n)   
      Additional
      Documents.
      Such
      other certificates, financial statements, schedules, resolutions, opinions
      of
      counsel, notes and other documents which are provided for hereunder or which
      the
      Bank shall require.

    

    3.2. Conditions
      Subsequent.
      

    

    (a)   
      Pledge
      Agreements.
      

    

    (i)   
      Born
      Heaters Canada.
      Borrower shall use its best efforts to deliver as early as possible and in
      no
      event shall deliver no later than four months after the Closing, a Pledge
      Agreement executed by Born Heaters Canada in form and substance acceptable
      to
      the Bank wherein Born Heaters Canada pledges its assets to the
      Bank.

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    (ii)   
      Foreign
      Subsidiaries.
      Borrower shall use its best efforts to deliver as early as possible and in
      no
      event shall deliver later than nine months after the Closing, Pledge Agreements
      executed by the Borrower in form and substance acceptable to the Bank pledging
      Sixty-Five Percent (65%) of its interest in its foreign Subsidiaries (excluding
      ARB ARENDAL) to and for the benefit of the Bank.

    

    (b)   
      Local
      Counsel Opinion.
      Borrower shall use its best efforts to deliver as early as possible and in
      no
      event shall deliver no later than four months after the Closing, an opinion
      of
      local counsel to Born Heaters Canada in form and substance acceptable to the
      Bank.

    

    (c)   
      UCC
      Termination Statements.
      Borrower shall deliver UCC Termination Statements in form and substance
      acceptable to the Bank terminating security interests not permitted hereunder
      in
      the Collateral of the Borrower and in collateral of the Guarantors shall be
      filed within four weeks of the execution of this Agreement. 

    

    (d)   
      Control
      Agreements.
      Should
      the Borrower fail to utilize the Bank as its primary bank of account and
      depository as per Section
      8.20
      hereof,
      then the Borrower shall provide the Bank with Control Agreements with respect
      to
      accounts held at other financial institutions as soon as possible.

    

    3.3. Event
      of Default.
      Any
      Event of Default, or Unmatured Event of Default shall have occurred and be
      continuing.

    

    3.4. Material
      Adverse Effect.
      The
      occurrence of any event having a Material Adverse Effect upon the
      Borrower.

    

    3.5. Litigation.
      Any
      litigation or governmental proceeding shall have been instituted against the
      Borrower or any of its officers or shareholders having a Materially Adverse
      Effect upon the Borrower.

    

    3.6. Representations
      and Warranties.
      Any
      representation or warranty of the Borrower contained herein or in any Loan
      Document shall be untrue or incorrect as of the date of any Loan as though
      made
      on such date, except to the extent such representation or warranty expressly
      relates to an earlier date.

    

    Section
      4. NOTES
      EVIDENCING LOANS.

    

    4.1
      Revolving
      Note.
      The
      Revolving Loans shall be evidenced by the Revolving Note. At the time of the
      initial disbursement of a Revolving Loan and at each time any additional
      Revolving Loan shall be requested hereunder or a repayment made in whole or
      in
      part thereon, a notation thereof shall be made on the books and records of
      the
      Bank. All amounts recorded shall be, absent manifest error, conclusive and
      binding evidence of (i) the principal amount of the Revolving Loans advanced
      hereunder and the amount of all Letter of Credit Obligations, (ii) any accrued
      and unpaid interest owing on the Revolving Loans, and (iii) all amounts repaid
      on the Revolving Loans or the Letter of Credit Obligations. The failure to
      record any such amount or any error in recording such amounts shall not,
      however, limit or otherwise affect the obligations of the Borrower under the
      Revolving Note to repay the principal amount of the Revolving Loans, together
      with all interest accruing thereon.

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    Section
      5. MANNER
      OF BORROWING.

    

    5.1. Borrowing
      Procedures.
      Each
      Revolving Loan may
      be
      advanced either as a Base Rate Loan or a LIBOR Loan. Each Loan shall be made
      available to the Borrower upon any written, verbal, electronic, telephonic
      or
      telecopy loan request which the Bank in good faith believes to emanate from
      a
      properly authorized representative of the Borrower, whether or not that is
      in
      fact the case. Each such request shall be effective upon receipt by the Bank,
      shall be irrevocable, and shall specify the date, amount and type of borrowing
      and, in the case of a LIBOR Loan, the initial Interest Period therefor. The
      Borrower shall select Interest Periods so as not to require a payment or
      prepayment of any LIBOR Loan during an Interest Period for such LIBOR Loan.
      The
      final Interest Period must be such that its expiration occurs on or before
      the
      Revolving Loan Maturity Date.
      A
      request for a Base Rate Loan must be received by the Bank no later than 12:00
      p.m. Chicago, Illinois time,
      on
      the day it is to be funded. A request for a LIBOR Loan must be (i) received
      by
      the Bank no later than 12:00 p.m. Chicago, Illinois time, three days before
      the
      day it is to be funded, and (ii) in an amount equal to One Hundred Thousand
      and
      00/100 Dollars ($100,000.00) or a higher integral multiple of One Hundred
      Thousand and 00/100 Dollars ($100,000.00). The proceeds of each Loan shall
      be
      made available at the office of the Bank by credit to the account of the
      Borrower or by other means requested by the Borrower and acceptable to the
      Bank.
      The Borrower does hereby irrevocably confirm, ratify and approve all such
      advances by the Bank and does hereby indemnify the Bank against losses and
      expenses (including court costs, attorneys’ and paralegals’ fees) and shall hold
      the Bank harmless with respect thereto.

    

    5.2. LIBOR
      Conversion and Continuation Procedures.
      Each
      LIBOR Loan shall automatically renew for the Interest Period specified in the
      initial request received by the Bank pursuant to Section 5.1, at the then
      current LIBOR Rate unless the Borrower, pursuant to a subsequent written notice
      received by the Bank, shall elect a different Interest Period or the conversion
      of all or a portion of such LIBOR Loan to a Base Rate Loan.
      Each
      Interest Period occurring after the initial Interest Period with respect to
      any
      LIBOR Loan shall commence on the same day of each applicable month as the first
      day of the initial Interest Period. Whenever the last day of any Interest Period
      with respect to any LIBOR Loan would otherwise occur on a day other than a
      Business Day, the last day of such Interest Period shall be extended to occur
      on
      the next succeeding Business Day. Whenever an Interest Period with respect
      to
      any LIBOR Loan would otherwise end on a day of a month for which there is no
      numerically corresponding day in the calendar month, such Interest Period shall
      end on the last day of such calendar month, unless such day is not a Business
      Day, in which event such Interest Period shall be extended to end on the next
      Business Day. Upon
      receipt by the Bank of such subsequent notice, the Borrower may, subject to
      the
      terms and conditions of this Agreement, elect, as of the last day of the
      applicable Interest Period, to continue any LIBOR Loan having an Interest Period
      expiring on such day for a different Interest Period, or to convert any such
      LIBOR Loan to a Base Rate Loan. Such notice shall, in the case of a conversion
      to a Base Rate Loan, be given before 12:00 p.m., Chicago time, on the proposed
      date of such conversion, and in the case of conversion to a LIBOR Loan having
      a
      different Interest Period, be given before 12:00 p.m., Chicago time, at least
      three Business Days prior to the proposed date of such conversion, specifying:
      (i) the proposed date of conversion; (ii) the aggregate amount of Loans to
      be
      converted; (iii) the type of Loans resulting from the proposed conversion;
      and
      (iv) the duration of the requested Interest Period. The Borrower may not elect
      a
      LIBOR Rate, and an Interest Period for a LIBOR Loan shall not automatically
      renew, with respect to any principal amount which is scheduled to be repaid
      before the last day of the applicable Interest Period, and any such amounts
      shall bear interest at the Base Rate Rate plus
      Applicable Margin.

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    5.3. Letters
      of Credit.
      All
      Letters of Credit shall bear such application, issuance, renewal, negotiation
      and other fees and charges, and bear such interest as charged by the Bank or
      otherwise payable pursuant to the Master Letter of Credit Agreement. In addition
      to the foregoing, each standby Letters of Credit issued under and pursuant
      to
      this Agreement shall bear an annual issuance fee equal to the LIBOR spread
      of
      the Applicable Margin based on the
      face
      amount of such standby Letter of Credit, payable by the Borrower prior to the
      issuance by the Bank of such Letter of Credit and annually thereafter, until
      (i)
      such Letter of Credit has expired or has been returned to the Bank, or (ii)
      the
      Bank has paid the beneficiary thereunder the full face amount of such Letter
      of
      Credit.

    

    5.4. Automatic
      Debit.
      In
      order to effectuate the timely payment of any of the Obligations when due,
      the
      Borrower hereby authorizes and directs the Bank, at the Bank’s option, to (a)
      debit the amount of the Obligations to any ordinary deposit account of the
      Borrower, or (b) make a Revolving Loan hereunder to pay the amount of the
      Obligations.

    

    5.5. Discretionary
      Disbursements.
      The
      Bank, in its sole and absolute discretion, may immediately upon notice to the
      Borrower, disburse any or all proceeds of the Loans made or available to the
      Borrower pursuant to this Agreement to pay any fees, costs, expenses or other
      amounts required to be paid by the Borrower hereunder and not so paid. All
      monies so disbursed shall be a part of the Obligations, payable by the Borrower
      on demand from the Bank.

    

    Section
      6. SECURITY
      FOR THE OBLIGATIONS.

    

    6.1. Security
      for Obligations.
      As
      security for the payment and performance of the Obligations, the Borrower does
      hereby pledge, assign, transfer, deliver and grant to the Bank, for its own
      benefit and as agent for its Affiliates, a continuing and unconditional first
      priority security interest in and to any and all property of the Borrower,
      of
      any kind or description, tangible or intangible, wheresoever located and whether
      now existing or hereafter arising or acquired, including the following (all
      of
      which property, along with the products and proceeds therefrom, are individually
      and collectively referred to as the “Collateral”):

    

    (a)   
      all
      property of, or for the account of, the Borrower now or hereafter coming into
      the possession, control or custody of, or in transit to, the Bank or any agent
      or bailee for the Bank or any parent, Affiliate or Subsidiary of the Bank or
      any
      participant with the Bank in the Loans (whether for safekeeping, deposit,
      collection, custody, pledge, transmission or otherwise), including all earnings,
      dividends, interest, or other rights in connection therewith and the products
      and proceeds therefrom, including the proceeds of insurance thereon;
      and

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (b)  
      the
      additional property of the Borrower, whether now existing or hereafter arising
      or acquired, and wherever now or hereafter located, together with all additions
      and accessions thereto, substitutions, betterments and replacements therefor,
      products and Proceeds therefrom, and all of the Borrower’s books and records and
      recorded data relating thereto (regardless of the medium of recording or
      storage), together with all of the Borrower’s right, title and interest in and
      to all computer software required to utilize, create, maintain and process
      any
      such records or data on electronic media, identified and set forth as
      follows:

    

    
      	 	
              (i)

            	
              All
                Accounts and all Goods whose sale, lease or other disposition by
                the
                Borrower has given rise to Accounts and have been returned to, or
                repossessed or stopped in transit by, the Borrower, or rejected or
                refused
                by an Account Debtor;

            

    

    

    
      	 	
              (ii)

            	
              All
                Inventory, including raw materials, work-in-process and finished
                goods;

            

    

    

    
      	 	
              (iii)

            	
              All
                Goods (other than Inventory), including embedded software, Equipment
                (excluding any Equipment subject to a Permitted Lien), and
                furniture;

            

    

    

    
      	 	
              (iv)

            	
              Cash;

            

    

    

    
      	 	
              (v)

            	
              All
                Software and computer programs;

            

    

    

    
      	 	
              (vi)

            	
              All
                Securities, Investment Property, Financial Assets and Deposit
                Accounts;

            

    

    

    
      	 	
              (vii)

            	
              All
                Chattel Paper, Electronic Chattel Paper, Instruments, Documents,
                Letter of
                Credit Rights, all proceeds of letters of credit, Supporting Obligations,
                notes secured by real estate, Commercial Tort Claims and General
                Intangibles, including Payment Intangibles;

            

    

    

    
      	 	
              (viii)

            	
              All
                Hedging Obligations;

            

    

    

    
      	 	
              (ix)

            	
              All
                Proceeds (whether Cash Proceeds or Noncash Proceeds) of the foregoing
                property, including all insurance policies and proceeds of insurance
                payable by reason of loss or damage to the foregoing property, including
                unearned premiums, and of eminent domain or condemnation awards;
                and

            

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    provided,
      however, that notwithstanding any of the other provisions set forth in this
      Section 6, this
      Agreement shall not constitute a grant of a security interest in any property
      to
      the extent that such grant of a security interest is prohibited by an
      requirements of any law, rule or regulation of a governmental authority;
      provided, further, that in no event shall the Collateral include equity
      securities in excess of shares or membership interest representing One Hundred
      Percent (100%) of the nonvoting stock or membership interests and Sixty-Five
      Percent (65%) of the total combined voting power of all classes of stock or
      membership interests entitled to vote of any foreign Subsidiary (excluding
      ARB
      ARENDAL), if such action would result in adverse, incremental tax liabilities
      under Section 956 of the Internal Revenue Code; provided, further, that the
      Collateral shall not include (i) any rights or interest in any contract, lease,
      permit, license, charter or license agreement entered into by Borrower prior
      to
      the date of this Agreement and covering personal property of the Borrower if
      under the terms of such contract, lease, permit, license, charter or license
      agreement, or applicable law with respect thereto, the valid grant of a security
      interest or lien therein to the Bank is prohibited as a matter of law or under
      the terms of such contract, lease, permit, license, charter or license agreement
      and such prohibition has not been or is not waived or the consent of the other
      party to such contract, lease, permit, license, charter or license agreement
      has
      not been or is not otherwise obtained, or (ii) any intent-to-use trademark
      or
      service mark application contained in General Intangibles if granting a security
      interest would result in an assignment of such applications to the Bank upon
      an
      Event of Default that would be deemed to invalidate, void, cancel or abandon
      such applications, provided that, the foregoing exclusion shall in no way be
      construed (a) to apply if any described prohibition is unenforceable under
      Section 9-406, 9-407 or 9-408 of the UCC or other applicable law, or (b) so
      as
      to limit, impair or otherwise affect the Bank’s continuing security interests in
      and liens upon any rights or interests of Borrower in or to monies due or to
      become due under any described contract, lease, permit, license, charter or
      license agreement (including any Accounts), or (c) to limit, impair or otherwise
      affect the Bank’s continuing security interests in and liens upon any rights or
      interest of the Borrower in and to any proceeds from the sale, license, lease
      or
      other dispositions of any such contract, lease, permit, license, charter or
      license agreement, or stock, or (d) to include any intent-to-use trademark
      or
      service mark applications at such time as the same include an amendment or
      allege use or statement of use.

    

    (c)   
      Sixty-Five Percent (65%) of the Borrower’s interest in its foreign Subsidiaries
      (excluding ARB ARENDAL) and up to Sixty-Five Percent (65%) of its interest,
      at
      the Bank’s discretion, in each foreign Subsidiary which Borrower acquires after
      the date of this Agreement.

    

    6.2. Other
      Collateral.
      In
      addition, the Obligations are also secured by the Pledge Agreements and, to
      the
      extent required by the Bank per Section
      8.20
      and
Section
      12.5(j)
      hereof,
      the Control Agreements.

    

    6.3. Possession
      and Transfer of Collateral.
      Unless
      an Event of Default exists hereunder, the Borrower shall be entitled to
      possession or use of the Collateral (other than Instruments or Documents,
      Tangible Chattel Paper, Investment Property consisting of certificated
      securities and other Collateral required to be delivered to the Bank pursuant
      to
      this Section 6). The cancellation or surrender of any Note, upon payment or
      otherwise, shall not affect the right of the Bank to retain the Collateral
      for
      any other of the Obligations. The Borrower shall not sell, assign (by operation
      of law or otherwise), license, lease or otherwise dispose of, or grant any
      option with respect to any of the Collateral, except that the Borrower may
      sell
      Inventory in the ordinary course of business and may sell property, plant and
      Equipment in the ordinary course of business.

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    6.4. Financing
      Statements.
      The
      Borrower shall, at the Bank’s request, at any time and from time to time,
      execute and deliver to the Bank such financing statements, amendments and other
      documents and do such acts as the Bank deems necessary in order to establish
      and
      maintain valid, attached and perfected first priority security interests in
      the
      Collateral in favor of the Bank, free and clear of all Liens and claims and
      rights of third parties whatsoever, except Permitted Liens. The Borrower hereby
      irrevocably authorizes the Bank at any time, and from time to time, to file
      in
      any jurisdiction any initial financing statements and amendments thereto without
      the signature of the Borrower that (a) indicate the Collateral (i) is comprised
      of all assets of the Borrower or words of similar effect, regardless of whether
      any particular asset comprising a part of the Collateral falls within the scope
      of Article 9 of the Uniform Commercial Code of the jurisdiction wherein such
      financing statement or amendment is filed, or (ii) as being of an equal or
      lesser scope or within greater detail as the grant of the security interest
      set
      forth herein, and (b) contain any other information required by Section 5 of
      Article 9 of the Uniform Commercial Code of the jurisdiction wherein such
      financing statement or amendment is filed regarding the sufficiency or filing
      office acceptance of any financing statement or amendment, including (i) whether
      the Borrower is an organization, the type of organization and any Organizational
      Identification Number issued to the Borrower, and (ii) in the case of a
      financing statement filed as a fixture filing or indicating Collateral as
      as-extracted collateral or timber to be cut, a sufficient description of the
      real property to which the Collateral relates. The Borrower hereby agrees that
      a
      photocopy or other reproduction of this Agreement is sufficient for filing
      as a
      financing statement and the Borrower authorizes the Bank to file this Agreement
      as a financing statement in any jurisdiction. The Borrower agrees to furnish
      any
      such information to the Bank promptly upon request. The Borrower further
      ratifies and affirms its authorization for any financing statements and/or
      amendments thereto, executed and filed by the Bank in any jurisdiction prior
      to
      the date of this Agreement. In addition, the Borrower shall make appropriate
      entries on its books and records disclosing the Bank’s security interests in the
      Collateral.

    

    6.5. Additional
      Collateral.
      The
      Borrower shall deliver to the Bank immediately upon its demand, such other
      collateral as the Bank may from time to time request, should the value of the
      Collateral, in the Bank’s sole and absolute discretion, decline, deteriorate,
      depreciate or become impaired, and does hereby grant to the Bank a continuing
      security interest in such other collateral, which, when pledged, assigned and
      transferred to the Bank shall be and become part of the Collateral. The Bank’s
      security interests in all of the foregoing Collateral shall be valid, complete
      and perfected whether or not covered by a specific assignment.

    
      
        
        

      

      
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    6.6. Preservation
      of the Collateral.
      The
      Bank may, but is not required, to take such actions from time to time as the
      Bank deems appropriate to maintain or protect the Collateral. The Bank shall
      have exercised reasonable care in the custody and preservation of the Collateral
      if the Bank takes such action as the Borrower shall reasonably request in
      writing which is not inconsistent with the Bank’s status as a secured party, but
      the failure of the Bank to comply with any such request shall not be deemed
      a
      failure to exercise reasonable care; provided, however, the Bank’s
      responsibility for the safekeeping of the Collateral shall (i) be deemed
      reasonable if such Collateral is accorded treatment substantially equal to
      that
      which the Bank accords its own property, and (ii) not extend to matters beyond
      the control of the Bank, including acts of God, war, insurrection, riot or
      governmental actions. In addition, any failure of the Bank to preserve or
      protect any rights with respect to the Collateral against prior or third
      parties, or to do any act with respect to preservation of the Collateral, not
      so
      requested by the Borrower, shall not be deemed a failure to exercise reasonable
      care in the custody or preservation of the Collateral. The Borrower shall have
      the sole responsibility for taking such action as may be necessary, from time
      to
      time, to preserve all rights of the Borrower and the Bank in the Collateral
      against prior or third parties. Without limiting the generality of the
      foregoing, where Collateral consists in whole or in part of securities, the
      Borrower represents to, and covenants with, the Bank that the Borrower has
      made
      arrangements for keeping informed of changes or potential changes affecting
      the
      securities (including rights to convert or subscribe, payment of dividends,
      reorganization or other exchanges, tender offers and voting rights), and the
      Borrower agrees that the Bank shall have no responsibility or liability for
      informing the Borrower of any such or other changes or potential changes or
      for
      taking any action or omitting to take any action with respect
      thereto.

    

    6.7. Other
      Actions as to any and all Collateral. The
      Borrower further agrees to take any other action reasonably requested by the
      Bank to ensure the attachment, perfection and first priority of, and the ability
      of the Bank to enforce, the Bank’s security interest in any and all of the
      Collateral, including (a) causing the Bank’s name to be noted as secured party
      on any certificate of title for a titled good if such notation is a condition
      to
      attachment, perfection or priority of, or ability of the bank to enforce, the
      Bank’s security interest in such Collateral, (b) complying with any provision of
      any statute, regulation or treaty of the United States as to any Collateral
      if
      compliance with such provision is a condition to attachment, perfection or
      priority of, or ability of the Bank to enforce, the Bank’s security interest in
      such Collateral, (c) obtaining governmental and other third party consents
      and
      approvals, including any consent of any licensor, lessor or other Person
      obligated on Collateral, (d) obtaining waivers from mortgagees and landlords
      in
      form and substance acceptable to the Bank, and (e) taking all actions required
      by the UCC in effect from time to time or by other law, as applicable in any
      relevant UCC jurisdiction, or by other law as applicable in any foreign
      jurisdiction. The Borrower further agrees to indemnify and hold the Bank
      harmless against claims of any Persons not a party to this Agreement concerning
      disputes arising over the Collateral.

    

    6.8. Commercial
      Tort Claims.
      If the
      Borrower shall at any time hold or acquire a Commercial Tort Claim, the Borrower
      shall immediately notify the Bank in writing signed by the Borrower of the
      details thereof and grant to the Bank in such writing a security interest
      therein and in the proceeds thereof, all upon the terms of this Agreement,
      in
      each case in form and substance acceptable to the Bank, and shall execute any
      amendments hereto deemed reasonably necessary by the Bank to perfect its
      security interest in such Commercial Tort Claim.

    
      
        
        

      

      
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    6.9. Electronic
      Chattel Paper and Transferable Records.
      If the
      Borrower at any time holds or acquires an interest in any electronic chattel
      paper or any “transferable record”, as that term is defined in Section 201 of
      the federal Electronic Signatures in Global and National Commerce Act, or in
      Section 16 of the Uniform Electronic Transactions Act as in effect in any
      relevant jurisdiction, the Borrower shall promptly notify the Bank thereof
      and,
      at the request of the Bank, shall take such action as the Bank may reasonably
      request to vest in the Bank control under Section 9-105 of the UCC of such
      electronic chattel paper or control under Section 201 of the federal Electronic
      Signatures in Global and National Commerce Act or, as the case may be, Section
      16 of the Uniform Electronic Transactions Act, as so in effect in such
      jurisdiction, of such transferable record. The Bank agrees with the Borrower
      that the Bank will arrange, pursuant to procedures satisfactory to the Bank
      and
      so long as such procedures will not result in the Bank’s loss of control, for
      the Borrower to make alterations to the electronic chattel paper or transferable
      record permitted under Section 9-105 of the UCC or, as the case may be, Section
      201 of the federal Electronic Signatures in Global and National Commerce Act
      or
      Section 16 of the Uniform Electronic Transactions Act for a party in control
      to
      make without loss of control.

    

    Section
      7. REPRESENTATIONS
      AND WARRANTIES.

    

    To
      induce
      the Bank to make the Loans, the Borrower makes the following representations
      and
      warranties to the Bank, each of which shall survive the execution and delivery
      of this Agreement:

    

    7.1. Borrower
      Organization and Name.
      The
      Borrower is a corporation duly
      organized, existing and in good standing under the laws of the State of Nevada,
      with full and adequate power to carry on and conduct its business as presently
      conducted and
      each
      Subsidiary is validly existing and in good standing under the laws of the
      jurisdiction of its organization. The Borrower and each Subsidiary is duly
      licensed or qualified in all foreign jurisdictions wherein the nature of its
      activities require such qualification or licensing, except for such
      jurisdictions where the failure to so qualify would not have a Material Adverse
      Effect. The Borrower’s Organizational Identification Number is C28746-2003. The
      exact legal name of the Borrower is as set forth in the first paragraph of
      this
      Agreement, and the Borrower currently does not conduct, nor has it during the
      last five (5) years conducted, business under any other name or trade name
      other
      than ARB, Inc.

    

    7.2. Authorization.
      The
      Borrower has full right, power and authority to enter into this Agreement,
      to
      make the borrowings and execute and deliver the Loan Documents as provided
      herein and to perform all of its duties and obligations under this Agreement
      and
      the other Loan Documents. The execution and delivery of this Agreement and
      the
      other Loan Documents will not, nor will the observance or performance of any
      of
      the matters and things herein or therein set forth, violate or contravene any
      provision of law or of the articles of incorporation or bylaws of
      the
      Borrower. All necessary and appropriate action has been taken on the part of
      the
      Borrower to authorize the execution and delivery of this Agreement and the
      Loan
      Documents.

    
      
        
        

      

      
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    7.3. Validity
      and Binding Nature.
      This
      Agreement and the other Loan Documents are the legal, valid and binding
      obligations of the Borrower, enforceable against the Borrower in accordance
      with
      their terms, subject to bankruptcy, insolvency and similar laws affecting the
      enforceability of creditors’ rights generally and to general principles of
      equity.

    

    7.4. Consent;
      Absence of Breach.
      The
      execution, delivery and performance of this Agreement, the other Loan Documents
      and any other documents or instruments to be executed and delivered by the
      Borrower in connection with the Loans, and the borrowings by the Borrower
      hereunder, do not and will not (a) require any consent, approval, authorization
      of, or filings with, notice to or other act by or in respect of, any
      governmental authority or any other Person (other than any consent or approval
      which has been obtained and is in full force and effect); (b) conflict with
      (i)
      any provision of law or any applicable regulation, order, writ, injunction
      or
      decree of any court or governmental authority, (ii) the articles of
      incorporation or bylaws of
      the
      Borrower or
      any of
      its Subsidiaries,
      or (iii)
      any material agreement, indenture, instrument or other document, or any
      judgment, order or decree, which is binding upon the Borrower or any of its
      Subsidiaries or any of their respective properties or assets; or (c) require,
      or
      result in, the creation or imposition of any Lien on any asset of
      Borrower or
      any of
      its Subsidiaries, other than Liens in favor of the Bank created pursuant to
      this
      Agreement.

    

    7.5. Ownership
      of Properties; Liens.
      The
      Borrower is the sole owner of all
      of
      its properties and assets, real and personal, tangible and intangible, of any
      nature whatsoever (including patents, trademarks, trade names, service marks
      and
      copyrights), free and clear of all Liens, charges and claims (including
      infringement claims with respect to patents, trademarks, service marks,
      copyrights and the like), other than Permitted Liens.

    

    7.6. Equity
      Ownership.
      All
      issued and outstanding Capital
      Securities of
      the
      Borrower and each of its Subsidiaries are duly authorized and validly issued,
      fully paid, non-assessable, and free and clear of all Liens other than those
      in
      favor of the Bank, if any, and such securities were issued in compliance with
      all applicable state and federal laws concerning the issuance of securities.
      As
      of the date hereof, except as set forth on Schedule
      7.6
      hereto,
      there are no pre-emptive or other outstanding rights, options, warrants,
      conversion rights or other similar agreements or understandings for the purchase
      or acquisition of any Capital
      Securities of
      the
      Borrower and each of its Subsidiaries.

    

    7.7. Intellectual
      Property.
      The
      Borrower owns and possesses or has a license or other right to use all
      Intellectual Property, as are necessary for the conduct of the businesses of
      the
      Borrower, without any infringement upon rights of others which could reasonably
      be expected to have a Material Adverse Effect upon the Borrower, and no material
      claim has been asserted and is pending by any Person challenging or questioning
      the use of any Intellectual Property or the validity or effectiveness of any
      Intellectual Property nor does the Borrower know of any valid basis for any
      such
      claim.

    

    7.8. Financial
      Statements.
      All
      financial statements submitted to the Bank have been prepared in accordance
      with
      sound accounting practices and GAAP on a basis, except as otherwise noted
      therein, consistent with the previous fiscal year and present fairly the
      financial condition of the Borrower and the results of the operations for the
      Borrower as of such date and for the periods indicated. Since the date of the
      most recent financial statement submitted by the Borrower to the Bank, there
      has
      been no change in the financial condition or in the assets or liabilities of
      the
      Borrower having a Material Adverse Effect on the Borrower.

    
      
        
        

      

      
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    7.9. Litigation
      and Other Liabilities.
      There
      is no litigation, arbitration proceeding, demand, charge, claim, petition or
      governmental investigation or proceeding pending, or threatened, against the
      Borrower, which, if adversely determined, which might reasonably be expected
      to
      have a Material Adverse Effect upon the Borrower, except as set forth in
Schedule
      7.9.
      Other
      than any liability incident to such litigation or proceedings, the Borrower
      has
      no Material guarantee obligations, contingent liabilities, liabilities for
      taxes, or any long-term leases or unusual forward or long-term commitments,
      including any interest rate or foreign currency swap or exchange transaction
      or
      other obligation in respect of derivatives, that are not fully-reflected or
      fully reserved for in the most recent audited financial statements delivered
      pursuant to subsection 8.8(a) or fully-reflected or fully reserved for in the
      most recent quarterly financial statements delivered pursuant to subsection
      8.8(b) and not permitted by Section
      9.1.

    

    7.10. Event
      of Default.
      No
      Event of Default or Unmatured Event of Default exists or would result from
      the
      incurrence by the Borrower of any of the Obligations hereunder or under any
      of
      the other Loan Document, and the Borrower is not in default (without regard
      to
      grace or cure periods) under any other contract or agreement to which it is
      a
      party.

    

    7.11. Adverse
      Circumstances.
      No
      condition, circumstance, event, agreement, document, instrument, restriction,
      litigation or proceeding (or threatened litigation or proceeding or basis
      therefor) exists which (a) would have a Material Adverse Effect upon the
      Borrower, or (b) would constitute an Event of Default or an Unmatured Event
      of
      Default.

    

    7.12. Environmental
      Laws and Hazardous Substances.
      The
      Borrower has not generated, used, stored, treated, transported, manufactured,
      handled, produced or disposed of any Hazardous Substances, on or off any of
      the
      premises of the Borrower (whether or not owned by it) in any manner which at
      any
      time violates in any Material respect any Environmental Law or any license,
      permit, certificate, approval or similar authorization thereunder. The Borrower
      will comply in all Material respects with all Environmental Laws and will obtain
      all Material licenses, permits certificates, approvals and similar
      authorizations thereunder. To Borrower’s knowledge, there has been no
      investigation, proceeding, complaint, order, directive, claim, citation or
      notice by any governmental authority or any other Person, nor is any pending
      or,
      to the best of the Borrower’s knowledge, threatened, and the Borrower shall
      immediately notify the Bank upon becoming aware of any such investigation,
      proceeding, complaint, order, directive, claim, citation or notice, and shall
      take prompt and appropriate actions to respond thereto, with respect to any
      Material non-compliance with, or violation of, the requirements of any
      Environmental Law by the Borrower or the release, spill or discharge, threatened
      or actual, of any Hazardous Material or the generation, use, storage, treatment,
      transportation, manufacture, handling, production or disposal of any Hazardous
      Material or any other environmental, health or safety matter against the
      Borrower or its business, operations or assets or, to the Borrower’s knowledge,
      any properties at which the Borrower has transported, stored or disposed of
      any
      Hazardous Substances. The Borrower has no Material liability, contingent or
      otherwise, in connection with a release, spill or discharge, threatened or
      actual, of any Hazardous Substances or the generation, use, storage, treatment,
      transportation, manufacture, handling, production or disposal of any Hazardous
      Material. Upon reasonable prior notice from the Bank, the Borrower further
      agrees to allow the Bank or its agent access to the properties of the Borrower
      and its Subsidiaries to confirm compliance with all Environmental Laws, and
      the
      Borrower shall, following determination by the Bank that there is Material
      non-compliance, or any condition which requires any action by or on behalf
      of
      the Borrower in order to avoid any Material non-compliance, with any
      Environmental Law, at the Borrower’s sole expense, cause an independent
      environmental engineer acceptable to the Bank to conduct such tests of the
      relevant site as are appropriate, and prepare and deliver a report setting
      forth
      the result of such tests, a proposed plan for remediation and an estimate of
      the
      costs thereof.

    
      
        
        

      

      
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    7.13. Solvency,
      etc.
      As of
      the date hereof, and immediately prior to and after giving effect to the
      issuance of each Letter of Credit and each Loan hereunder and the use of the
      proceeds thereof, (a) the fair value of the Borrower’s assets is greater than
      the amount of its liabilities (including disputed, contingent and unliquidated
      liabilities) as such value is established and liabilities evaluated as required
      under the Section 548 of the Bankruptcy Code, (b) the present fair saleable
      value of the Borrower’s assets is not less than the amount that will be required
      to pay the probable liability on its debts as they become absolute and matured,
      (c) the Borrower is able to realize upon its assets and pay its debts and other
      liabilities (including disputed, contingent and unliquidated liabilities) as
      they mature in the normal course of business, (d) the Borrower does not intend
      to, and does not believe that it will, incur debts or liabilities beyond its
      ability to pay as such debts and liabilities mature, and (e) the Borrower is
      not
      engaged in business or a transaction, and is not about to engage in business
      or
      a transaction, for which its property would constitute unreasonably small
      capital.

    

    7.14. ERISA
      Obligations.
      All
      Employee Plans of the Borrower meet the minimum funding standards of Section
      302
      of ERISA and 412 of the Internal Revenue Code where applicable, and each such
      Employee Plan that is intended to be qualified within the meaning of Section
      401
      of the Internal Revenue Code of 1986 is qualified. No withdrawal liability
      has
      been incurred under any such Employee Plans and no “Reportable Event” or
“Prohibited Transaction” (as such terms are defined in ERISA), has occurred with
      respect to any such Employee Plans, unless approved by the appropriate
      governmental agencies. The Borrower has promptly paid and discharged all
      obligations and liabilities arising under the Employee Retirement Income
      Security Act of 1974 (“ERISA”) of a character which if unpaid or unperformed
      might result in the imposition of a Lien against any of its properties or
      assets.

    

    7.15. Labor
      Relations.
      Except
      as could not reasonably be expected to have a Material Adverse Effect, (i)
      there
      are no strikes, lockouts or other labor disputes against the Borrower
      or threatened,
      (ii) hours worked by and payment made to employees of the Borrower have not
      been
      in violation of the Fair Labor Standards Act or any other applicable law, and
      (ii) no unfair labor practice complaint is pending against the Borrower or
      threatened before any governmental authority.

    
      
        
        

      

      
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    7.16. Security
      Interest.
      This
      Agreement creates a valid security interest in favor of the Bank in the
      Collateral and, when properly perfected by filing in the appropriate
      jurisdictions, or by possession or Control of such Collateral by the Bank or
      delivery of such Collateral to the Bank, shall constitute a valid, perfected,
      first-priority security interest in such Collateral.

    

    7.17. Lending
      Relationship.
      The
      relationship hereby created between the Borrower and the Bank is and has been
      conducted on an open and arm’s length basis in which no fiduciary relationship
      exists, and the Borrower has not relied and is not relying on any such fiduciary
      relationship in executing this Agreement and in consummating the Loans. The
      Bank
      represents that it will receive any Note payable to its order as evidence of
      a
      bank loan.

    

    7.18. Business
      Loan.
      The
      Loans, including interest rate, fees and charges as contemplated hereby, (i)
      are
      business loans within the purview of 815 ILCS 205/4(1)(c), as amended from
      time
      to time, (ii) are an exempted transaction under the Truth In Lending Act, 12
      U.S.C. 1601 et seq.,
      as
      amended from time to time, and (iii) do not, and when disbursed shall not,
      violate the provisions of the Illinois usury laws, any consumer credit laws
      or
      the usury laws of any state which may have jurisdiction over this transaction,
      the Borrower or any property securing the Loans.

    

    7.19. Taxes.
      The
      Borrower has timely filed all Material tax returns and reports required by
      law
      to have been filed by it and has paid all Material taxes, governmental charges
      and assessments due and payable with respect to such returns, except any such
      taxes or charges which are being diligently contested in good faith by
      appropriate proceedings and for which adequate reserves in accordance with
      GAAP
      shall have been set aside on its books, are insured against or bonded over
      to
      the satisfaction of the Bank and the contesting of such payment does not create
      a Lien on the Collateral which is not a Permitted Lien. There is no controversy
      or objection pending, or, threatened in respect of any tax returns of the
      Borrower. The Borrower has made adequate reserves on its books and records
      in
      accordance with GAAP for all taxes that have accrued but which are not yet
      due
      and payable.

    

    7.20. Compliance
      with Regulation U.
      No
      portion of the proceeds of the Loans shall be used by the Borrower, or any
      Affiliate of the Borrower, either directly or indirectly, for the purpose of
      purchasing or carrying any margin stock, within the meaning of Regulation U
      as
      adopted by the Board of Governors of the Federal Reserve System or any successor
      thereto.

    

    7.21. Governmental
      Regulation.
      The
      Borrower,
      its
      Subsidiaries and any of the Guarantors are not,
      or
      after giving effect to any loan, will not be, subject to regulation under the
      Public Utility Holding Company Act of 1935, the Federal Power Act, the ICC
      Termination Act of 1995 or the Investment Company Act of 1940 or to any federal
      or state statute or regulation limiting its ability to incur indebtedness for
      borrowed money.

    

    7.22. Bank
      Accounts.
      Other
      than as allowed pursuant to Section
      9.3(d)
      hereof
      and Section
      9.3(h)
      hereof
      and except for the bank accounts held at Union Bank for a period not longer
      than
      four months after the Closing, all Deposit Accounts and operating bank accounts
      of the Borrower and its Subsidiaries are located at the Bank. 

    
      
        
        

      

      
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    7.23. Place
      of Business.
      The
      principal place of business and books and records of the Borrower is set forth
      in the preamble to this Agreement and the other permanently occupied locations
      where the Borrower and its Subsidiaries conduct business, other than at such
      principal place of business, is as set forth on Schedule
      7.23
      attached
      hereto and made a part hereof, and the Borrower shall promptly notify the Bank
      of any change in such locations. Upon reasonable request by the Bank, the
      Borrower shall provide the Bank with a list of locations of
      Collateral.

    

    7.24. Complete
      Information.
      This
      Agreement and all financial statements, schedules, certificates, confirmations,
      agreements, contracts, and other materials and information heretofore or
      contemporaneously herewith furnished in writing by the Borrower to the Bank
      for
      purposes of, or in connection with, this Agreement and the transactions
      contemplated hereby is, and all written information hereafter furnished by
      or on
      behalf of the Borrower to the Bank pursuant hereto or in connection herewith
      will be, true and accurate in every material respect on the date as of which
      such information is dated or certified, and none of such information is or
      will
      be incomplete by omitting to state any material fact necessary to make such
      information not misleading in light of the circumstances under which made (it
      being recognized by the Bank that any projections and forecasts provided by
      the
      Borrower are based on good faith estimates and assumptions believed by the
      Borrower to be reasonable as of the date of the applicable projections or
      assumptions and that actual results during the period or periods covered by
      any
      such projections and forecasts may differ from projected or forecasted
      results).

    

    7.25. Subordinated
      Debt.
      The
      subordination provisions of the Subordinated Debt are enforceable against the
      holders of the Subordinated Debt by the Bank. The Obligations constitute Senior
      Debt entitled to the benefits of the subordination provisions contained in
      the
      Subordinated Debt. The Borrower acknowledges that the Bank is entering into
      this
      Agreement and is making the Loans in reliance upon the subordination provisions
      of the Subordinated Debt and this Section
      7.25.

    

    7.26. Guarantors. Every
      domestic Subsidiary of the Borrower is a Guarantor and has executed a Guaranty
      in favor of the Bank.

    

    7.27. Ownership
      of Foreign Subsidiaries. Subject
      to Section
      7.28
      hereof,
      the Borrower is the holder of at least Sixty-Five Percent (65%) of the issued
      and outstanding equity interests of its foreign Subsidiaries. 

    

    7.28. Ownership
      of ARB ARENDAL.
      The
      Borrower is the holder of Forty-Nine Percent (49%) of the issued and outstanding
      equity interests of ARB ARENDAL.

    

    Section
      8. AFFIRMATIVE
      COVENANTS.

    

    8.1. Compliance
      with Bank Regulatory Requirements; Increased Costs.
      If the
      Bank shall reasonably determine that any Regulatory Change, or compliance by
      the
      Bank or any Person controlling the Bank with any request or directive (whether
      or not having the force of law) of any governmental authority, central bank
      or
      comparable agency has or would have the effect of reducing the rate of return
      on
      the Bank’s or such controlling Person’s capital as a consequence of the Bank’s
      obligations hereunder or under any Letter of Credit to a level below that which
      the Bank or such controlling Person could have achieved but for such Regulatory
      Change or compliance (taking into consideration the Bank’s or such controlling
      Person’s policies with respect to capital adequacy) by an amount deemed by the
      Bank or such controlling Person to be material or would otherwise reduce the
      amount of any sum received or receivable by the Bank under this Agreement or
      under any Note with respect thereto, then from time to time, upon demand by
      the
      Bank (which demand shall be accompanied by a statement setting forth the basis
      for such demand and a calculation of the amount thereof in reasonable detail),
      the Borrower shall pay directly to the Bank or such controlling Person such
      additional amount as will compensate the Bank for such increased cost or such
      reduction, so long as such amounts have accrued on or after the day which is
      one
      hundred eighty days (180) days prior to the date on which the Bank first made
      demand therefor.

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    8.2. Borrower
      Existence.
      The
      Borrower shall and shall cause each of its Subsidiaries to at all times (a)
      preserve and maintain its existence and good standing in the jurisdiction of
      its
      organization, (b) preserve and maintain its qualification to do business and
      good standing in each jurisdiction where the nature of its business makes such
      qualification necessary (other than such jurisdictions in which the failure
      to
      be qualified or in good standing could not reasonably be expected to have a
      Material Adverse Effect), and (c) continue as a going concern in the business
      which the Borrower is presently conducting. If the Borrower does not have an
      Organizational Identification Number and later obtains one, the Borrower shall
      promptly notify the Bank of such Organizational Identification
      Number.

    

    8.3. Compliance
      With Laws.
      The
      Borrower shall use the proceeds of the Loans for working capital and other
      general corporate or business purposes not in contravention of any requirements
      of law and not in violation of this Agreement, and shall comply, and cause
      each
      Subsidiary to comply, in all respects, including the conduct of its business
      and
      operations and the use of its properties and assets, with all applicable laws,
      rules, regulations, decrees, orders, judgments, licenses and permits, except
      where failure to comply could not reasonably be expected to have a Material
      Adverse Effect. In addition, and without limiting the foregoing sentence, the
      Borrower shall (a) ensure, and cause each Subsidiary to ensure, that no person
      who owns a controlling interest in or otherwise controls the Borrower or any
      Subsidiary is or shall be listed on the Specially Designated Nationals and
      Blocked Person List or other similar lists maintained by the Office of Foreign
      Assets Control (“OFAC”), the Department of the Treasury or included in any
      Executive Orders, (b) not use or permit the use of the proceeds of the Loans
      to
      violate any of the foreign asset control regulations of OFAC or any enabling
      statute or Executive Order relating thereto, and (c) comply, and cause each
      Subsidiary to comply, with all applicable Bank Secrecy Act (“BSA”) laws and
      regulations, as amended.

    

    8.4. Payment
      of Taxes and Liabilities.
      The
      Borrower shall pay, and cause each Subsidiary to pay, and discharge, prior
      to
      delinquency and before penalties accrue thereon, all Material property and
      other
      taxes, and all Material governmental charges or levies against it or any of
      the
      Collateral, as well as claims of any kind which, if unpaid, could become a
      Lien
      on any of its property; provided that the foregoing shall not require the
      Borrower or any Subsidiary to pay any such tax or charge so long as it shall
      contest the validity thereof in good faith by appropriate proceedings and shall
      set aside on its books adequate reserves with respect thereto in accordance
      with
      GAAP and, in the case of a claim which could become a Lien on any of the
      Collateral, such contest proceedings stay the foreclosure of such Lien or the
      sale of any portion of the Collateral to satisfy such claim.

    
      
        
        

      

      
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    8.5. Maintain
      Property.
      The
      Borrower shall and shall cause each of its Subsidiaries to at all times
      maintain, preserve and keep its plant, properties and Equipment, including
      any
      Collateral, in good repair, working order and condition, normal wear and tear
      excepted, and shall from time to time make all needful and proper repairs,
      renewals, replacements, and additions thereto so that at all times the
      efficiency thereof shall be fully preserved and maintained. The Borrower shall
      permit the Bank to examine and inspect such plant, properties and Equipment,
      including any Collateral, at all reasonable times subject to Section
      8.12
      hereof.

    

    8.6. Maintain
      Insurance.
      The
      Borrower shall at all times maintain,
      and
      cause
      each Subsidiary to maintain,
      with
      insurance companies reasonably acceptable to the Bank, such insurance coverage
      as may be required by any law or governmental regulation or court decree or
      order applicable to it and such other insurance as is customarily maintained
      by
      companies similarly situated. The Borrower shall furnish to the Bank a
      certificate setting forth in reasonable detail the nature and extent of all
      insurance maintained by the Borrower, which shall be reasonably acceptable
      in
      all respects to the Bank. The Borrower shall cause each issuer of an insurance
      policy to provide the Bank with an endorsement (i) showing the Bank as lender’s
      loss payee with respect to each policy of property or casualty insurance; and
      (ii) providing that thirty (30) days notice will be given to the Bank prior
      to
      any cancellation of, material reduction or change in coverage provided by or
      other material modification to such policy. The Borrower shall provide the
      Bank
      with an endorsement showing the Bank as lender’s loss payee on any business
      interruption insurance policy maintained by the Borrower.

    

    In
      the
      event the Borrower either fails to provide the Bank with evidence of the
      insurance coverage required by this Section or at any time hereafter shall
      fail
      to obtain or maintain any of the policies of insurance required above, or to
      pay
      any premium in whole or in part relating thereto, then the Bank, without waiving
      or releasing any obligation or default by the Borrower hereunder, may at any
      time (but shall be under no obligation to so act), obtain and maintain such
      policies of insurance and pay such premiums and take any other action with
      respect thereto, which the Bank deems advisable. This insurance coverage (a)
      may, but need not, protect the Borrower’s interests in such property, including
      the Collateral, and (b) may not pay any claim made by, or against, the Borrower
      in connection with such property, including the Collateral. The Borrower may
      later cancel any such insurance purchased by the Bank, but only after providing
      the Bank with evidence that the Borrower has obtained the insurance coverage
      required by this Section. If the Bank purchases insurance for the Collateral,
      the Borrower will be responsible for the costs of that insurance, including
      interest and any other charges that may be imposed with the placement of the
      insurance, until the effective date of the cancellation or expiration of the
      insurance. The costs of the insurance may be added to the principal amount
      of
      the Loans owing hereunder. The costs of the insurance may be more than the
      cost
      of the insurance the Borrower may be able to obtain on its own.

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    8.7. ERISA
      Liabilities; Employee Plans.
      The
      Borrower shall (i) keep in full force and effect any and all Employee Plans
      which are presently in existence or may, from time to time, come into existence
      under ERISA, and not withdraw from any such Employee Plans, unless such
      withdrawal can be effected or such Employee Plans can be terminated without
      liability to the Borrower; (ii) make contributions to all of such Employee
      Plans
      in a timely manner and in a sufficient amount to comply with the standards
      of
      ERISA; including the minimum funding standards of ERISA; (iii) comply with
      all
      material requirements of ERISA which relate to such Employee Plans; (iv) notify
      the Bank immediately upon receipt by the Borrower of any notice concerning
      the
      imposition of any withdrawal liability or of the institution of any proceeding
      or other action which may result in the termination of any such Employee Plans
      or the appointment of a trustee to administer such Employee Plans; (v) promptly
      advise the Bank of the occurrence of any “Reportable Event” or “Prohibited
      Transaction” (as such terms are defined in ERISA), with respect to any such
      Employee Plans; and (vi) amend any Employee Plan that is intended to be
      qualified within the meaning of Section 401 of the Internal Revenue Code of
      1986
      to the extent necessary to keep the Employee Plan qualified, and to cause the
      Employee Plan to be administered and operated in a manner that does not cause
      the Employee Plan to lose its qualified status.

    

    8.8. Financial
      Statements.
      The
      Borrower shall at all times maintain a standard and modern system of accounting,
      on the accrual basis of accounting and in all respects in accordance with GAAP,
      and shall furnish to the Bank or its authorized representatives such information
      regarding the business affairs, operations and financial condition of the
      Borrower, including:

    

    (a)   
      promptly
      when available, and in any event, within one hundred twenty (120) days after
      the
      close of each of its fiscal years, a copy of (i) the annual audited consolidated
      and consolidating financial statements of the Borrower and its Subsidiaries,
      including balance sheet, statement of income and retained earnings, statement
      of
      cash flows for the fiscal year then ended, work in process reports, accounts
      receivable agings, accounts payable agings (if available), summary of litigation
      and claims, financial forecast and budget and updates thereto and such other
      information (including nonfinancial information) as the Bank may request, in
      reasonable detail, prepared and certified without adverse reference to going
      concern value and without qualification by an independent auditor of recognized
      standing, selected by the Borrower and reasonably acceptable to the
      Bank;
      

    

    (b)   
      promptly
      when available, and in any event, within forty-five (45) days following the
      end
      of each fiscal quarter, a copy of the management prepared consolidated and
      consolidating financial statements of the Borrower and its Subsidiaries
      regarding such fiscal quarter, including balance sheet, statement of income
      and
      retained earnings, statement of cash flows for the fiscal quarter then ended,
      work in process reports, accounts receivable aging reports, summary of
      litigation and claims and such other information (including nonfinancial
      information) as the Bank may request, in reasonable detail, prepared and
      certified as true and correct by the Borrower’s treasurer or chief financial
      officer.

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    (c)   
      within
      ten (10) days after the filing due date (as such date may be extended in
      accordance with properly granted extensions) each year, a signed copy of the
      complete income tax returns filed with the Internal Revenue Service by the
      Borrower.

    

    No
      change
      with respect to such accounting principles shall be made by the Borrower without
      giving prior notification to the Bank. The Borrower represents and warrants
      to
      the Bank that the financial statements delivered to the Bank at or prior to
      the
      execution and delivery of this Agreement and to be delivered at all times
      thereafter accurately reflect and will accurately reflect the financial
      condition of the Borrower. The Bank shall have the right at all times during
      business hours to inspect the books and records of the Borrower and make
      extracts therefrom.

    

    8.9. Guarantor
      Financial Statements.
      The
      Borrower shall furnish, or cause to be furnished, to the Bank or its authorized
      representatives such information regarding the business affairs, operations
      and
      financial condition of each Guarantor, including within ten (10) days after
      the
      filing due date (as such date may be extended in accordance with properly
      granted extensions) each year, a signed copy of the complete income tax returns
      filed with the Internal Revenue Service by the Borrower.

    

    The
      Borrower represents and warrants to the Bank that (i) each Guarantor shall
      at
      all times maintain a standard and modern system of accounting, on the accrual
      basis of accounting and in all respects in accordance with GAAP, (ii) no change
      with respect to such accounting principles shall be made by each Guarantor
      without giving prior notification to the Bank, (iii) the financial statements
      of
      each Guarantor delivered to the Bank at or prior to the execution and delivery
      of this Agreement and to be delivered at all times thereafter accurately reflect
      and will fairly and accurately reflect the financial condition of each
      Guarantor, (iv) the Bank shall have the right at all times during business
      hours
      to inspect the books and records of each Guarantor and make extracts therefrom,
      and (v) the Borrower agrees to advise the Bank immediately of any development,
      condition or event that may have a Material Adverse Effect on each
      Guarantor.

    

    8.10. Supplemental
      Financial Statements.
      The
      Borrower shall immediately upon receipt thereof, provide to the Bank copies
      of
      interim and supplemental reports if any, submitted to the Borrower by
      independent accountants in connection with any interim audit or review of the
      books of the Borrower.

    

    8.11. Covenant
      Compliance Certificate.
      The
      Borrower shall, contemporaneously with the furnishing of the quarterly financial
      statements pursuant to Section
      8.8(b),
      deliver
      to the Bank a duly completed compliance certificate, dated the date of such
      financial statements and certified as true and correct by an appropriate officer
      of the Borrower, containing a computation of each of the financial covenants
      set
      forth in Section
      10
      and
      stating that the Borrower has not become aware of any Event of Default or
      Unmatured Event of Default that has occurred and is continuing or, if there
      is
      any such Event of Default or Unmatured Event of Default describing it and the
      steps, if any, being taken to cure it.

    

    8.12. Field
      Audits.
      The
      Borrower shall permit the Bank to inspect the Inventory, other Tangible Assets
      and/or other business operations of the Borrower and each Subsidiary, to perform
      appraisals of the Equipment of the Borrower and each Subsidiary, and to inspect,
      audit, check and make copies of, and extracts from, the books, records, computer
      data, computer programs, journals, orders, receipts, correspondence and other
      data relating to Inventory, Accounts and any other Collateral, the results
      of
      which must be satisfactory to the Bank in the Bank’s sole and absolute
      discretion. All such inspections or audits by the Bank shall be at the
      Borrower’s sole expense,
      provided,
      however, that so long as no Event of Default or Unmatured Event of Default
      exists, the Borrower shall not be required to
      reimburse the Bank for inspections or audits more frequently than once each
      fiscal year.

    
      
        
        

      

      
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    8.13. Other
      Reports.
      The
      Borrower shall, within such period of time as the Bank may specify, deliver
      to
      the Bank such other schedules and reports as the Bank may require.

    

    8.14. Collateral
      Records.
      The
      Borrower shall keep full and accurate books and records relating to the
      Collateral and shall mark such books and records to indicate the Bank’s Lien in
      the Collateral, including placing a legend, in form and content acceptable
      to
      the Bank, on all Chattel Paper created by the Borrower indicating that the
      Bank
      has a Lien in such Chattel Paper.

    

    8.15. Intellectual
      Property.
      The
      Borrower shall maintain, preserve and renew all Intellectual Property necessary
      for the conduct of its business as and where the same is currently located
      as
      heretofore or as hereafter conducted by it.

    

    8.16. Notice
      of Proceedings.
      The
      Borrower, promptly upon becoming aware, shall give written notice to the Bank
      of
      any litigation, arbitration or governmental investigation or proceeding not
      previously disclosed by the Borrower to the Bank which has been instituted
      or,
      to the knowledge of the Borrower, is threatened against the Borrower or any
      of
      its Subsidiaries or to which any of their
      respective properties is subject which might reasonably be expected to have
      a
      Material Adverse Effect.

    

    8.17. Notice
      of Event of Default or Material Adverse Effect.
      The
      Borrower shall, immediately after the commencement thereof, give notice to
      the
      Bank in writing of the occurrence of any Event of Default or any Unmatured
      Event
      of Default, or the occurrence of any condition or event having a Material
      Adverse Effect. 

    

    8.18. Environmental
      Matters.
      If any
      Material release or threatened release or other disposal of Hazardous Substances
      shall occur or shall have occurred on any real property or any other assets
      of
      the Borrower or any of its Subsidiaries, the Borrower shall,
      or
      shall
      cause the applicable Subsidiary to,
      cause
      the prompt containment and removal of such Hazardous Substances and the
      remediation of such real property or other assets as necessary to comply in
      all
      Material respects with all Environmental Laws and to preserve the value of
      such
      real property or other assets. Without limiting the generality of the foregoing,
      the Borrower shall,
      and
      shall
      cause each Subsidiary to,
      comply
      in all Material respects with any Federal or state judicial or administrative
      order requiring the performance at any real property of the Borrower or any
      Subsidiary of
      activities in response to the release or threatened release of a Hazardous
      Substance. To the extent that the transportation of Hazardous Substances is
      permitted by this Agreement, the Borrower shall, and shall cause its
      Subsidiaries to, dispose of such Hazardous Substances, or of any other wastes,
      only at licensed disposal facilities operating in Material compliance with
      Environmental Laws. 

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    8.19. Further
      Assurances.
      The
      Borrower shall take, and cause each Subsidiary to take, such actions as are
      necessary or as the Bank may reasonably request from time to time to ensure
      that
      the Obligations under the Loan Documents are secured by substantially all of
      the
      assets of the Borrower and
      its
      Subsidiaries, in each case as the Bank may determine, including (a) the
      execution and delivery of security agreements, pledge agreements, mortgages,
      deeds of trust, financing statements and other documents, and the filing or
      recording of any of the foregoing, and (b) the delivery of certificated
      securities and other collateral with respect to which perfection is obtained
      by
      possession.

    

    8.20. Banking
      Relationship.
      Except
      for payroll accounts, Cash Equivalent Investments permitted by Section
      9.3
      hereof
      and certain other accounts held at other banking institutions not to exceed
      an
      aggregate amount of Two Hundred Thousand and 00/100 Dollars ($200,000.00),
      the
      Borrower covenants and agrees that as of four months after the Closing it shall
      utilize the Bank as its primary bank of account and depository for all financial
      services, including all receipts, disbursements, cash management and related
      services. 

    

    8.21. Payroll
      Accounts.
      The
      Borrower covenants and agrees that it shall not keep funds on deposit in its
      payroll account beyond what is necessary to fund one payroll period at a
      time.

    

    8.22. Cash
      Equivalent Investments.
      The
      Borrower covenants and agrees that the first Five Million and 00/100 Dollars
      ($5,000,000.00) of Cash Equivalent Investments Borrower has shall be held at
      the
      Bank.

    

    8.23. Proceeds
      of Asset Sales.
      Subject
      to the restrictions for Permitted Liens, any proceeds from the sale of assets
      must be paid to the Bank to reduce the outstanding Revolving Credit
      Loan.

    

    8.24. Domestic
      Subsidiaries.
      The
      Borrower covenants and agrees that it shall cause any and each domestic
      Subsidiary it acquires after the date of this Agreement to execute a Guaranty.
      

    

    8.25. Foreign
      Subsidiaries. Subject
      to Section
      3.2
      hereof,
      the Borrower covenants and agrees that it shall execute Pledge Agreements in
      form and substance acceptable to the Bank pledging up to Sixty-Five Percent
      (65%) of its interest to the Bank in its foreign subsidiaries (excluding ARB
      ARENDAL) and further covenants and agrees that it shall execute a Pledge
      Agreement in form and substance acceptable to the Bank, at the Bank’s
      discretion, pledging up to Sixty-Five Percent (65%) of its interest to the
      Bank
      in each foreign Subsidiary it acquires after the date of this Agreement. Subject
      to Section
      3.2
      hereof,
      Borrower further covenants and agrees that it shall cause Born Heaters Canada
      to
      execute a Pledge Agreement in form and substance acceptable to the Bank wherein
      Born Heaters Canada pledges its assets to the Bank.

    
      
        
        

      

      
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    Section
      9. NEGATIVE
      COVENANTS.

    

    9.1. Debt.
      Except
      as permitted by Section
      9.3
      hereof,
      the Borrower shall not, either directly or indirectly, create, assume, incur
      or
      have outstanding any Debt (including purchase money indebtedness), or become
      liable, whether as endorser, guarantor, surety or otherwise, for any debt or
      obligation of any other Person, except:

    

    (a)   
      the
      Obligations under this Agreement and the other Loan Documents;

    

    (b)   
      obligations
      pursuant to Permitted Liens;

    

    (c)   
      obligations
      of the Borrower for Taxes, assessments, municipal or other governmental
      charges;

    

    (d)   
      obligations
      of the Borrower for accounts payable, other than for money borrowed, incurred
      in
      the ordinary course of business;

    

    (e)   
      Hedging
      Obligations incurred in favor of the Bank or an Affiliate thereof for bona
      fide
      hedging purposes and not for speculation;

    

    (f)    
      Debt
      described on Schedule
      9.1
      and any
      extension, renewal or refinancing thereof subject to the prior written approval
      of the Bank;

    

    (g)   
      other
      unsecured Debt, in addition to the Debt listed above, in an aggregate amount
      outstanding at any time not to exceed One Million and 00/100 Dollars
      ($1,000,000.00); 

    

    (h)   
      Debt
      for
      Capital Expenditures subject to the limitations set forth in Section
      10.4
      hereof;
      and

    

    (i)    
      Subordinated
      Debt in an amount outstanding at any time not to exceed Five Million and 00/100
      Dollars ($5,000,000.00) on terms acceptable to the Bank.

    

    9.2. Encumbrances.
      Except
      as set forth on Schedule
      9.2
      hereof,
      the Borrower shall not, either directly or indirectly, create, assume, incur
      or
      suffer or permit to exist any Lien or charge of any kind or character upon
      any
      asset of the Borrower, whether owned at the date hereof or hereafter acquired,
      except for Permitted Liens.

    

    9.3. Investments.
      The
      Borrower shall not, either directly or indirectly, make or have outstanding
      any
      Investment, except:

    

    (a)   
      contributions
      by the Borrower to the capital of any Subsidiary or Guarantor which has granted
      a first perfected security interest in all of its assets in favor of the Bank,
      or by any Subsidiary to the capital of any other domestic Wholly-Owned
      Subsidiary;

    

    (b)   
      Investments
      constituting Debt permitted by Section
      9.1;

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    (c)   
      Cash
      Equivalent Investments with the first Five Million and 00/100 Dollars
      ($5,000,000.00) Borrower has to be held at the Bank;

    

    (d)   
      Payroll
      accounts and certain other accounts held at other banking institutions not
      to
      exceed an aggregate amount of Two Hundred Thousand and 00/100 Dollars
      ($200,000.00); 

    

    (e)   
      Investments
      in securities of Account Debtors received pursuant to any plan of reorganization
      or similar arrangement upon the bankruptcy or insolvency of such account
      debtors; 

    

    (f)   
      Investments
      in any Subsidiary, Affiliate or third party entity, which is not either (a)
      Born
      Heaters Canada or (b) a Guarantor, shall be limited to an aggregate amount
      of
      Twelve Million and 00/100 Dollars ($12,000,000.00) as reported on the balance
      sheet of the Borrower. For purposes of this Section
      9.3(f),
      Section
      9.3(g)
      and
      Section 9.3(h)
      hereof,
      investments shall include accounts receivable, loans, guarantees, letters of
      credit or any contingent liability used to support obligations, equity
      investments or advances;

    

    (g)  
      Using
      the
      definition of investments set forth in Section
      9.3(f)
      hereof,
      investments in Born Heaters Canada (subject to the pledge of the assets of
      Born
      Heaters Canada to the Bank per Section
      3.2(a)(i)
      hereof)
      or any Guarantor. 

    

    (h)   
      Subject
      to the aggregate limitations set forth in Section
      9.3(f)
      hereof
      and using the definition of investments set forth in Section
      9.3(f)
      hereof,
      investments in ARB ECUADOR shall be limited to Six Million and 00/100 Dollars
      ($6,000,000.00); investments, in ARB ARENDAL shall be limited to Eight Million
      and 00/100 Dollars ($8,000,000.00); and investments in any new foreign entity
      created after the Closing shall be limited to Five Million and 00/100 Dollars
      ($5,000,000.00);

    

    (i)    
      Excess
      Cash to be invested in instruments rated at least A-l by Standard & Poor’s
      Ratings Services, a division of The McGraw-Hill Companies, Inc. or P-l by
      Moody’s Investors Service, Inc.; and

    

    (j)    
      Advances
      and/or loans to employees or shareholders up to Five Hundred Thousand and 00/100
      Dollars ($500,000.00).

    

    provided,
      however, that (i) any Investment which when made complies with the requirements
      of the definition of the term “Cash Equivalent Investment” may continue to be
      held notwithstanding that such Investment if made thereafter would not comply
      with such requirements; and (ii) no Investment otherwise permitted by
      subsections (b) or (c) shall be permitted to be made if, immediately before
      or
      after giving effect thereto, any Event of Default or Unmatured Event of Default
      exists. If any Event of Default or Unmatured Event of Default exists, then
      the
      Borrower must return Excess Cash invested pursuant to Section
      9.3(i)
      to the
      Bank at the request of the Bank. 

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    9.4. Transfer;
      Merger; Sales.
      Excluding the pledge of assets of Born Heaters Canada to the Bank of Montreal
      for a period of no longer than four months after the Closing and excluding
      the
      pledge of certain assets to secure certain letters of credit issued on behalf
      of
      Born Heaters Canada to other banks, the Borrower shall not and not permit any
      Subsidiary to without the prior written consent of the Bank, whether in one
      transaction or a series of related transactions, (a) be a party to any merger
      or
      consolidation, or purchase or otherwise acquire all or substantially all of
      the
      assets or any Capital Securities of any class of, or any partnership or joint
      venture interest in, any other Person, except for (i) any such merger,
      consolidation, sale, transfer, conveyance, lease or assignment of or by any
      Wholly-Owned Subsidiary into the Borrower or into any other domestic
      Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition by the
      Borrower or any domestic Wholly-Owned Subsidiary of the assets or equity
      interests of any Wholly-Owned Subsidiary, (b) except as permitted by
Section
      6.3
      hereof,
      sell, transfer, convey or lease all or any substantial part of its assets or
      Capital Securities (including the sale of Capital Securities of any Subsidiary),
      except for sales of Inventory in the ordinary course of business, or (c) sell
      or
      assign, with or without recourse, any receivables.

    

    9.5. Issuance
      of Capital Securities.
      The
      Borrower shall not and shall not permit any Subsidiary to issue any Capital
      Securities other than, so long as a Change of Control has not occurred, (a)
      any
      issuance of shares in the ordinary course of business, or (b) any issuance
      of
      shares of the Borrower’s common Capital Securities pursuant to any employee or
      director option program, benefit plan or compensation program, or (c) any
      issuance of Capital Securities by a Subsidiary to the Borrower or another
      Subsidiary in accordance with Section
      9.6.
      

    

    9.6. Distributions.
      So long
      as no Event of Default or Unmatured Event of Default exists or would result
      therefrom, the Borrower and any of its Subsidiaries may (a) make distributions
      of dividends including stock dividends, whether in cash or otherwise, to any
      of
      its equityholders, (b) purchase or redeem any of its equity interests or any
      warrants, options or other rights in respect thereof, (c) pay any management
      fees or similar fees to any of its equityholders or any Affiliate thereof,
      (d)
      pay or prepay interest on, principal of, premium, if any, redemption,
      conversion, exchange, purchase, retirement, defeasance, sinking fund or any
      other payment in respect of any Subordinated Debt, or (e) set aside funds for
      any of the foregoing. 

    

    9.7. Transactions
      with Affiliates.
      The
      Borrower shall not, directly or indirectly, enter into or permit to exist any
      transaction with any of its Affiliates or with any director, officer or employee
      of the Borrower other than transactions in the ordinary course of, and pursuant
      to the reasonable requirements of, the business of the Borrower and upon fair
      and reasonable terms which are fully disclosed to the Bank and are no less
      favorable to the Borrower than would be obtained in a comparable arm’s length
      transaction with a Person that is not an Affiliate of the Borrower.

    

    9.8. Unconditional
      Purchase Obligations.
      The
      Borrower shall not and shall not permit any Subsidiary to
      enter
      into or be a party to any contract for the purchase of materials, supplies
      or
      other property or services if such contract requires that payment be made by
      it
      regardless of whether delivery is ever made of such materials, supplies or
      other
      property or services.

    
      
        
        

      

      
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    9.9. Cancellation
      of Debt.
      The
      Borrower shall not,
      and
      not
      permit any Subsidiary to, cancel any claim or debt owing to it, except for
      reasonable consideration or in the ordinary course of business.

    

    9.10. Inconsistent
      Agreements.
      The
      Borrower shall not and shall not permit any Subsidiary to enter into any
      agreement containing any provision which would (a) be violated or breached
      by
      any borrowing by the Borrower hereunder or by the performance by the Borrower
      or
      any Subsidiary of any of its Obligations hereunder or under any other Loan
      Document, (b) prohibit the Borrower or any Subsidiary from granting to the
      Bank
      a Lien on any of its assets or (c) create or permit to exist or become effective
      any encumbrance or restriction on the ability of any Subsidiary to (i) pay
      dividends or make other distributions to the Borrower or any other Subsidiary,
      or pay any Debt owed to the Borrower or any other Subsidiary, (ii) make loans
      or
      advances to the Borrower or any other Subsidiary, or (iii) transfer any of
      its
      assets or properties to the Borrower or any other Subsidiary, other than (A)
      customary restrictions and conditions contained in agreements relating to the
      sale of all or a substantial part of the assets of any Subsidiary pending such
      sale, provided that such restrictions and conditions apply only to the
      Subsidiary to be sold and such sale is permitted hereunder,
      (B) restrictions or conditions imposed by any agreement relating to
      purchase money Debt, Capital Leases and other secured Debt permitted by this
      Agreement if such restrictions or conditions apply only to the property or
      assets securing such Debt, and (C) customary provisions in leases and other
      contracts restricting the assignment thereof.

    

    9.11. Use
      of
      Proceeds.
      Neither
      the Borrower nor any of its Subsidiaries or Affiliates shall use any portion
      of
      the proceeds of the Loans, either directly or indirectly, for the purpose of
      purchasing any securities underwritten by ABN AMRO Incorporated, LaSalle Bank
      Financial Services, Inc., or any other Affiliate of the Bank.

    

    9.12. Business
      Activities; Change of Legal Status and Organizational Documents.
      The
      Borrower shall not and shall not permit any Subsidiary to (a) engage in any
      line
      of business other than the businesses engaged in on the date hereof and
      businesses reasonably related thereto, (b) change its name, its Organizational
      Identification Number, if it has one, its type of organization, its jurisdiction
      of organization or other legal structure, or (b) permit its charter, bylaws
      or
      other organizational documents to be amended or modified in any way which could
      reasonably be expected to materially adversely affect the interests of the
      Bank.

    

    9.13. Domestic
      Subsidiaries.
      Except
      as permitted pursuant to Section 9.4, the Borrower shall not sell, liquidate
      or
      dissolve any domestic Subsidiary without the prior written consent of the
      Bank.

    

    9.14. Foreign
      Subsidiaries. Except
      as
      permitted pursuant to Section 9.4, the Borrower shall not sell, liquidate or
      dissolve any foreign Subsidiary without the prior written consent of the Bank.
      The Borrower shall not pledge any of its interest in its foreign Subsidiaries
      to
      any Person other than the Bank.

    
      
        
        

      

      
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    9.15. Permitted
      Liens.
      The
      Borrower shall not incur any second lien against any Permitted
      Lien.

    

    Section
      10. FINANCIAL
      COVENANTS.

    

    10.1. Tangible
      Net Worth.
      As of
      the end of each of its fiscal quarters,
      the
      Borrower shall maintain Tangible Net Worth in an amount not less than Thirty
      Million and 00/100 Dollars ($30,000,000.00). The Tangible Net Worth shall be
      reset annually commencing with the Fiscal Year ending December 31, 2007 to
      increase by Twenty-Five Percent (25%) of the prior Fiscal Year’s Net Income.
      Investments in any Subsidiary, Affiliate and third party entity, which is not
      either (a) Born Heaters Canada or (b) a Guarantor, in excess of Ten Million
      Dollars and 00/100 ($10,000,000.00) shall be deducted from Tangible Net
      Worth.

     

    10.2. Total
      Debt to
      Tangible Net Worth.
      As of
      the end of each of its fiscal quarters, the Borrower shall maintain a ratio
      of
      Total Debt to Tangible
      Net Worth of not greater than 1.75 to 1.00.

    

    10.3. Debt
      Service Coverage.
      On a
      rolling four quarter basis, the Borrower shall maintain a ratio of (a) pre-tax
      income from the Borrower’s operations for such period plus Interest Charges for
      such period, plus the amount of noncash charges for Depreciation for such
      period, to (b) Interest Charges for such period plus
      the
      aggregate amount of principal payments on Debt for such period, of not less
      than
      1.25 to 1.00.

    

    10.4. Capital
      Expenditure Limitations.
      The
      Borrower shall not incur Capital Expenditures in an amount greater than Five
      Million and 00/100 Dollars ($5,000,000.00) in the aggregate in any one Fiscal
      Year. The Borrower shall be allowed to rollover up to One Million Five Hundred
      Thousand and 00/100 Dollars ($1,500,000.00) of unused Capital Expenditure
      limitations from the prior Fiscal Year into the following Fiscal Year provided
      that Borrower shall not incur Capital Expenditures in excess of Six Million
      Five
      Hundred Thousand and 00/100 ($6,500,000.00) in any one Fiscal Year.
      Notwithstanding the foregoing, the Borrower shall be permitted to incur
      additional Capital Expenditures in excess of the permitted amount as set forth
      herein for Fiscal Years 2007 and 2008 in the total amount of Three Million
      and
      00/100 Dollars ($3,000,000.00) for the purchase of specialized pipeline
      equipment.

    

    Section
      11. EVENTS
      OF DEFAULT.

    

    The
      Borrower, without notice or demand of any kind, shall be in default under this
      Agreement upon the occurrence of any of the following events (each an “Event of
      Default”).

    

    11.1. Nonpayment
      of Obligations.
      Any
      principal amount due and owing on any Note or any of the Obligations, whether
      by
      its terms or as otherwise provided herein, is not paid when due and any interest
      due and owing on any Note is not paid within five days after it is
      due.

    
      
        
        

      

      
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    11.2. Misrepresentation.
      Any
      oral or written warranty, representation, certificate or statement of any
      Obligor in this Agreement, the other Loan Documents or any other agreement
      with
      the Bank shall be false when made or at any time thereafter, or if any financial
      data or any other information now or hereafter furnished to the Bank by or
      on
      behalf of any Obligor shall prove to be false, inaccurate or misleading in
      any
      material respect.

    

    11.3. Nonperformance.
      Other
      than default for nonpayment of Obligations as set forth in Section
      11.1
      hereof,
      any failure to perform or default in the performance of any covenant, condition
      or agreement contained in this Agreement, or in the other Loan Documents or
      any
      other agreement with the Bank and such failure to perform or default in the
      performance continues for 15 days.

    

    11.4. Default
      under Loan Documents.
      Other
      than default for nonpayment of Obligations as set forth in Section
      11.1
      hereof,
      a default under any of the other Loan Documents, all of which covenants,
      conditions and agreements contained therein are hereby incorporated in this
      Agreement by express reference, shall be and constitute an Event of Default
      under this Agreement and any other of the Obligations and such default under
      any
      of the Loan Documents continues for 15 days.

    

    11.5. Default
      under Other Debt.
      Any
      default by any Obligor in the payment of any Debt in excess of Two Hundred
      Fifty
      Thousand and 00/100 Dollars ($250,000.00) for any other obligation beyond any
      period of grace provided with respect thereto or in the performance of any
      other
      term, condition or covenant contained in any agreement (including any capital
      or
      operating lease or any agreement in connection with the deferred purchase price
      of property) under which any such obligation is created, the effect of which
      default is to cause or permit the holder of such obligation (or the other party
      to such other agreement) to cause such obligation to become due prior to its
      stated maturity or terminate such other agreement.

    

    11.6. Other
      Material Obligations.
      Any
      default in the payment when due, or in the performance or observance of, any
      material obligation of, or condition agreed to by, any Obligor with respect
      to
      any material purchase or lease of goods or services where such default, singly
      or in the aggregate with all other such defaults, might reasonably be expected
      to have a Material Adverse Effect.

    

    11.7. Bankruptcy,
      Insolvency, etc.
      Any
      Obligor becomes insolvent or generally fails to pay, or admits in writing its
      inability or refusal to pay, debts as they become due; or any Obligor applies
      for, consents to, or acquiesces in the appointment of a trustee, receiver or
      other custodian for such Obligor or any property thereof, or makes a general
      assignment for the benefit of creditors; or, in the absence of such application,
      consent or acquiescence, a trustee, receiver or other custodian is appointed
      for
      any Obligor or for a substantial part of the property of any thereof and is
      not
      discharged within sixty (60) days; or any bankruptcy, reorganization, debt
      arrangement, or other case or proceeding under any bankruptcy or insolvency
      law,
      or any dissolution or liquidation proceeding, is commenced in respect of any
      Obligor, and if such case or proceeding is not commenced by such Obligor, it
      is
      consented to or acquiesced in by such Obligor, or remains undismissed for sixty
      (60) days; or any Obligor takes any action to authorize, or in furtherance
      of,
      any of the foregoing.

    
      
        
        

      

      
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    11.8. Judgments.
      The
      entry of any final judgment, decree, levy, attachment, garnishment or other
      process in excess of Two Hundred Fifty Thousand and 00/100 Dollars
      ($250,000.00), or the filing of any Lien in excess of Two Hundred Fifty Thousand
      and 00/100 Dollars ($250,000.00) against any Obligor which is not fully covered
      by insurance, and such judgment or other process shall not have been, within
      thirty (30) days from the entry thereof, (i) bonded over to the satisfaction
      of
      the Bank and appealed, (ii) vacated, or (iii) discharged.

    

    11.9. Change
      in Control.
      The
      occurrence of any Change in Control.

    

    11.10. Collateral
      Impairment.
      The
      entry of any judgment, decree, levy, attachment, garnishment or other process,
      or the filing of any Lien against, any Material portion of the Collateral or
      any
      Material portion of any other collateral under a separate security agreement
      securing any of the Obligations and such judgment or other process shall not
      have been, within thirty (30) days from the entry thereof, (i) bonded over
      to
      the satisfaction of the Bank and appealed, (ii) vacated, or (iii) discharged,
      or
      the loss, theft, destruction, seizure or forfeiture, or the occurrence of any
      Material deterioration or impairment of any of the Collateral or any of the
      collateral under any security agreement securing any of the Obligations, or
      any
      Material decline or depreciation in the value or market price thereof (whether
      actual or reasonably anticipated), which causes the Collateral, in the sole
      opinion of the Bank acting in good faith, to become unsatisfactory as to value
      or character, or which causes the Bank to reasonably believe that it is insecure
      and that the likelihood for repayment of the Obligations is or will soon be
      impaired, time being of the essence. The cause of such deterioration,
      impairment, decline or depreciation shall include, but is not limited to, the
      failure by the Borrower to do any act deemed necessary by the Bank to preserve
      and maintain the value and collectability of the Collateral.

    

    11.11. Material
      Adverse Effect.
      The
      occurrence of any development, condition or event which has a Material Adverse
      Effect on the Borrower.

    

    11.12. Guaranty.
      There
      is a discontinuance by any of the Guarantors of any of the Guaranties, or any
      of
      the Guarantors shall contest the validity of such Guaranty.

    

    11.13. Subordinated
      Debt.
      The
      subordination provisions of any Subordinated Debt shall for any reason be
      revoked or invalid or otherwise cease to be in full force and effect. The
      Borrower shall contest in any manner, or any other holder thereof shall contest
      in any judicial proceeding, the validity or enforceability of the Subordinated
      Debt or deny that it has any further liability or obligation thereunder, or
      the
      Obligations shall for any reason not have the priority contemplated by the
      subordination provisions of the Subordinated Debt.

    
      
        
        

      

      
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    Section
      12. REMEDIES.

    

    Upon
      the
      occurrence of an Event of Default, the Bank shall have all rights, powers and
      remedies set forth in the Loan Documents, in any written agreement or instrument
      (other than this Agreement or the Loan Documents) relating to any of the
      Obligations or any security therefor, as a secured party under the UCC or as
      otherwise provided at law or in equity. Without limiting the generality of
      the
      foregoing, the Bank may, at its option upon the occurrence of an Event of
      Default, declare its commitments to the Borrower to be terminated and all
      Obligations to be immediately due and payable, provided, however, that upon
      the
      occurrence of an Event of Default under Section
      11.7,
      all
      commitments of the Bank to the Borrower shall immediately terminate and all
      Obligations shall be automatically due and payable, all without demand, notice
      or further action of any kind required on the part of the Bank. The Borrower
      hereby waives any and all presentment, demand, notice of dishonor, protest,
      and
      all other notices and demands in connection with the enforcement of Bank’s
      rights under the Loan Documents, and hereby consents to, and waives notice
      of
      release, with or without consideration, of any of the Borrower or any of the
      Guarantors or of any Collateral, notwithstanding anything contained herein
      or in
      the Loan Documents to the contrary. In addition to the foregoing:

    

    12.1. Possession
      and Assembly of Collateral.
      The
      Bank may, without notice, demand or legal process of any kind, take possession
      of any or all of the Collateral (in addition to Collateral of which the Bank
      already has possession), wherever it may be found, and for that purpose may
      pursue the same wherever it may be found, and may at any time enter into any
      of
      the Borrower’s premises where any of the Collateral may be or is supposed to be,
      and search for, take possession of, remove, keep and store any of the Collateral
      until the same shall be sold or otherwise disposed of and the Bank shall have
      the right to store and conduct a sale of the same in any of the Borrower’s
      premises without cost to the Bank. At the Bank’s request, the Borrower will, at
      the Borrower’s sole expense, assemble the Collateral and make it available to
      the Bank at a place or places to be designated by the Bank which is reasonably
      convenient to the Bank and the Borrower.

    

    12.2. Sale
      of Collateral.
      The
      Bank may sell any or all of the Collateral at public or private sale, upon
      such
      terms and conditions as the Bank may deem proper, and the Bank may purchase
      any
      or all of the Collateral at any such sale. The Borrower acknowledges that the
      Bank may be unable to effect a public sale of all or any portion of the
      Collateral because of certain legal and/or practical restrictions and provisions
      which may be applicable to the Collateral and, therefore, may be compelled
      to
      resort to one or more private sales to a restricted group of offerees and
      purchasers. The Borrower consents to any such private sale so made even though
      at places and upon terms less favorable than if the Collateral were sold at
      public sale. The Bank shall have no obligation to clean-up or otherwise prepare
      the Collateral for sale. The Bank may apply the net proceeds, after deducting
      all costs, expenses, attorneys’ and paralegals’ fees incurred or paid at any
      time in the collection, protection and sale of the Collateral and the
      Obligations, to the payment of any Note and/or any of the other Obligations,
      returning the excess proceeds, if any, to the Borrower. The Borrower shall
      remain liable for any amount remaining unpaid after such application, with
      interest at the Default Rate. Any notification of intended disposition of the
      Collateral required by law shall be conclusively deemed reasonably and properly
      given if given by the Bank at least ten (10) calendar days before the date
      of
      such disposition. The Borrower hereby confirms, approves and ratifies all acts
      and deeds of the Bank relating to the foregoing, and each part thereof, and
      expressly waives any and all claims of any nature, kind or description which
      it
      has or may hereafter have against the Bank or its representatives, by reason
      of
      taking, selling or collecting any portion of the Collateral. The Borrower
      consents to releases of the Collateral at any time (including prior to default)
      and to sales of the Collateral in groups, parcels or portions, or as an
      entirety, as the Bank shall deem appropriate. The Borrower expressly absolves
      the Bank from any loss or decline in market value of any Collateral by reason
      of
      delay in the enforcement or assertion or nonenforcement of any rights or
      remedies under this Agreement.

    
      
        
        

      

      
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    12.3. Standards
      for Exercising Remedies. To
      the
      extent that applicable law imposes duties on the Bank to exercise remedies
      in a
      commercially reasonable manner, the Borrower acknowledges and agrees that it
      is
      not commercially unreasonable for the Bank (a) to fail to incur expenses
      reasonably deemed significant by the Bank to prepare Collateral for disposition
      or otherwise to complete raw material or work-in-process into finished goods
      or
      other finished products for disposition, (b) to fail to obtain third party
      consents for access to Collateral to be disposed of, or to obtain or, if not
      required by other law, to fail to obtain governmental or third party consents
      for the collection or disposition of Collateral to be collected or disposed
      of,
      (c) to fail to exercise collection remedies against Account Debtors or other
      Persons obligated on Collateral or to remove liens or encumbrances on or any
      adverse claims against Collateral, (d) to exercise collection remedies against
      Account Debtors and other Persons obligated on Collateral directly or through
      the use of collection agencies and other collection specialists, (e) to
      advertise dispositions of Collateral through publications or media of general
      circulation, whether or not the Collateral is of a specialized nature, (f)
      to
      contact other Persons, whether or not in the same business as the Borrower,
      for
      expressions of interest in acquiring all or any portion of the Collateral,
      (g)
      to hire one or more professional auctioneers to assist in the disposition of
      Collateral, whether or not the collateral is of a specialized nature, (h) to
      dispose of Collateral by utilizing internet sites that provide for the auction
      of assets of the types included in the Collateral or that have the reasonable
      capability of doing so, or that match buyers and sellers of assets, (i) to
      dispose of assets in wholesale rather than retail markets, (j) to disclaim
      disposition warranties, including any warranties of title, (k) to purchase
      insurance or credit enhancements to insure the Bank against risks of loss,
      collection or disposition of Collateral or to provide to the Bank a guaranteed
      return from the collection or disposition of Collateral, or (l) to the extent
      deemed appropriate by the Bank, to obtain the services of other brokers,
      investment bankers, consultants and other professionals to assist the Bank
      in
      the collection or disposition of any of the Collateral. The Borrower
      acknowledges that the purpose of this section is to provide non-exhaustive
      indications of what actions or omissions by the Bank would not be commercially
      unreasonable in the Bank’s exercise of remedies against the Collateral and that
      other actions or omissions by the Bank shall not be deemed commercially
      unreasonable solely on account of not being indicated in this section. Without
      limitation upon the foregoing, nothing contained in this section shall be
      construed to grant any rights to the Borrower or to impose any duties on the
      Bank that would not have been granted or imposed by this Agreement or by
      applicable law in the absence of this section.

    

    12.4. UCC
      and Offset Rights.
      The
      Bank may exercise, from time to time, any and all rights and remedies available
      to it under the UCC or under any other applicable law in addition to, and not
      in
      lieu of, any rights and remedies expressly granted in this Agreement or in
      any
      other agreements between any Obligor and the Bank, and may, without demand
      or
      notice of any kind, appropriate and apply toward the payment of such of the
      Obligations, whether matured or unmatured, including costs of collection and
      attorneys’ and paralegals’ fees, and in such order of application as the Bank
      may, from time to time, elect, any indebtedness of the Bank to any Obligor,
      however created or arising, including balances, credits, deposits, accounts
      or
      moneys of such Obligor in the possession, control or custody of, or in transit
      to the Bank. The Borrower, on behalf of itself and each Obligor, hereby waives
      the benefit of any law that would otherwise restrict or limit the Bank in the
      exercise of its right, which is hereby acknowledged, to appropriate at any
      time
      hereafter any such indebtedness owing from the Bank to any
      Obligor.

    
      
        
        

      

      
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    12.5. Additional
      Remedies.
      The
      Bank shall have the right and power to:

    

    (a)   
      instruct
      the Borrower, at its own expense, to notify any parties obligated on any of
      the
      Collateral, including any Account Debtors, to make payment directly to the
      Bank
      of any amounts due or to become due thereunder, or the Bank may directly notify
      such obligors of the security interest of the Bank, and/or of the assignment
      to
      the Bank of the Collateral and direct such obligors to make payment to the
      Bank
      of any amounts due or to become due with respect thereto, and thereafter,
      collect any such amounts due on the Collateral directly from such Persons
      obligated thereon;

    

    (b)  
      enforce
      collection of any of the Collateral, including any Accounts, by suit or
      otherwise, or make any compromise or settlement with respect to any of the
      Collateral, or surrender, release or exchange all or any part thereof, or
      compromise, extend or renew for any period (whether or not longer than the
      original period) any indebtedness thereunder;

    

    (c)   
      take
      possession or control of any proceeds and products of any of the Collateral,
      including the proceeds of insurance thereon;

    

    (d)  
      extend,
      renew or modify for one or more periods (whether or not longer than the original
      period) any Note, any other of the Obligations, any obligation of any nature
      of
      any other obligor with respect to any Note or any of the
      Obligations;

    

    (e)   
      grant
      releases, compromises or indulgences with respect to any Note, any of the
      Obligations, any extension or renewal of any of the Obligations, any security
      therefor, or to any other obligor with respect to any Note or any of the
      Obligations;

    

    (f)   
      transfer
      the whole or any part of securities which may constitute Collateral into the
      name of the Bank or the Bank’s nominee without disclosing, if the Bank so
      desires, that such securities so transferred are subject to the security
      interest of the Bank, and any corporation, association, or any of the managers
      or trustees of any trust issuing any of such securities, or any transfer agent,
      shall not be bound to inquire, in the event that the Bank or such nominee makes
      any further transfer of such securities, or any portion thereof, as to whether
      the Bank or such nominee has the right to make such further transfer, and shall
      not be liable for transferring the same;

    
      
        
        

      

      
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    (g)   
      vote
      the
      Collateral;

    

    (h)  
      make
      an
      election with respect to the Collateral under Section 1111 of the Bankruptcy
      Code or take action under Section 364 or any other section of the Bankruptcy
      Code; provided, however, that any such action of the Bank as set forth herein
      shall not, in any manner whatsoever, impair or affect the liability of the
      Borrower hereunder, nor prejudice, waive, nor be construed to impair, affect,
      prejudice or waive the Bank’s rights and remedies at law, in equity or by
      statute, nor release, discharge, nor be construed to release or discharge,
      the
      Borrower, any guarantor or other Person liable to the Bank for the Obligations;
      

    

    (i)   
      at
      any
      time, and from time to time, accept additions to, releases, reductions,
      exchanges or substitution of the Collateral, without in any way altering,
      impairing, diminishing or affecting the provisions of this Agreement, the Loan
      Documents, or any of the other Obligations, or the Bank’s rights hereunder,
      under any Note or under any of the other Obligations; and

    

    (j)    
      advise
      the Borrower whether to deposit cash as necessary into the Borrower’s account at
      the Bank or whether to execute, within ten business days of such Event of
      Default or Unmatured Event of Default, Control Agreements(s) with respect to
      Cash Equivalent Investments.

    

    The
      Borrower hereby ratifies and confirms whatever the Bank may do with respect
      to
      the Collateral and agrees that the Bank shall not be liable for any error of
      judgment or mistakes of fact or law with respect to actions taken in connection
      with the Collateral.

    

    12.6. Attorney-in-Fact.
      Upon
      the occurrence and during the continuation of an Event of Default, the Borrower
      hereby irrevocably makes, constitutes and appoints the Bank (and any officer
      of
      the Bank or any Person designated by the Bank for that purpose) as the
      Borrower’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in the
      Borrower’s name, place and stead, with full power of substitution, to (i) take
      such actions as are permitted in this Agreement, (ii) execute such financing
      statements and other documents and to do such other acts as the Bank may require
      to perfect and preserve the Bank’s security interest in, and to enforce such
      interests in the Collateral, and (iii) carry out any remedy provided for in
      this
      Agreement, including endorsing the Borrower’s name to checks, drafts,
      instruments and other items of payment, and proceeds of the Collateral,
      executing change of address forms with the postmaster of the United States
      Post
      Office serving the address of the Borrower, changing the address of the Borrower
      to that of the Bank, opening all envelopes addressed to the Borrower and
      applying any payments contained therein to the Obligations. The Borrower hereby
      acknowledges that the constitution and appointment of such proxy and
      attorney-in-fact are coupled with an interest and are irrevocable. The Borrower
      hereby ratifies and confirms all that such attorney-in-fact may do or cause
      to
      be done by virtue of any provision of this Agreement.

    

    12.7. No
      Marshaling.
      The
      Bank shall not be required to marshal any present or future collateral security
      (including this Agreement and the Collateral) for, or other assurances of
      payment of, the Obligations or any of them or to resort to such collateral
      security or other assurances of payment in any particular order. To the extent
      that it lawfully may, the Borrower hereby agrees that it will not invoke any
      law
      relating to the marshaling of collateral which might cause delay in or impede
      the enforcement of the Bank’s rights under this Agreement or under any other
      instrument creating or evidencing any of the Obligations or under which any
      of
      the Obligations is outstanding or by which any of the Obligations is secured
      or
      payment thereof is otherwise assured, and, to the extent that it lawfully may,
      the Borrower hereby irrevocably waives the benefits of all such
      laws.

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

    12.8. Application
      of Proceeds.
      The
      Bank will within three (3) Business Days after receipt of cash or solvent
      credits from collection of items of payment, proceeds of Collateral or any
      other
      source, apply the whole or any part thereof against the Obligations secured
      hereby. The Bank shall further have the exclusive right to determine how, when
      and what application of such payments and such credits shall be made on the
      Obligations, and such determination shall be conclusive upon the Borrower.
      Any
      proceeds of any disposition by the Bank of all or any part of the Collateral
      may
      be first applied by the Bank to the payment of expenses incurred by the Bank
      in
      connection with the Collateral, including attorneys’ fees and legal expenses as
      provided for in Section
      13
      hereof.

    

    12.9. No
      Waiver.
      No
      Event of Default shall be waived by the Bank except in writing. No failure
      or
      delay on the part of the Bank in exercising any right, power or remedy hereunder
      shall operate as a waiver of the exercise of the same or any other right at
      any
      other time; nor shall any single or partial exercise of any such right, power
      or
      remedy preclude any other or further exercise thereof or the exercise of any
      other right, power or remedy hereunder. There shall be no obligation on the
      part
      of the Bank to exercise any remedy available to the Bank in any order. The
      remedies provided for herein are cumulative and not exclusive of any remedies
      provided at law or in equity. The Borrower agrees that in the event that the
      Borrower fails to perform, observe or discharge any of its Obligations or
      liabilities under this Agreement or any other agreements with the Bank, no
      remedy of law will provide adequate relief to the Bank, and further agrees
      that
      the Bank shall be entitled to temporary and permanent injunctive relief in
      any
      such case without the necessity of proving actual damages.

     

    12.10. Letters
      of Credit.
      With
      respect to all Letters of Credit for which presentment for honor shall not
      have
      occurred at the time of an acceleration pursuant to this Section 12, the
      Borrower shall at such time deposit in a cash collateral account opened by
      the
      Bank an amount equal to the Letter of Credit Obligations then outstanding.
      Amounts held in such cash collateral account shall be applied by the Bank to
      the
      payment of drafts drawn under such Letters of Credit, and the unused portion
      thereof after all such Letters of Credit shall have expired or been fully drawn
      upon, if any, shall be applied to repay the Obligations, in such order of
      application as the Bank may, in its sole discretion, from time to time elect.
      After all such Letters of Credit shall have expired or been fully drawn upon,
      all commitments to make Loans hereunder have terminated and all other
      Obligations have been indefeasibly satisfied and paid in full in cash, the
      balance, if any, in such cash collateral account shall be returned to the
      Borrower or such other Person as may be lawfully entitled
      thereto.

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

    Section
      13. MISCELLANEOUS.

    

    13.1. Obligations
      Absolute.
      None of
      the following shall affect the Obligations of the Borrower to the Bank under
      this Agreement or the Bank’s rights with respect to the Collateral:

    

    (a)   
      acceptance
      or retention by the Bank of other property or any interest in property as
      security for the Obligations;

    

    (b)   
      release
      by the Bank of any of the Borrower or the Guarantors or of all or any part
      of
      the Collateral or of any party liable with respect to the
      Obligations;

    

    (c)   
      release,
      extension, renewal, modification or substitution by the Bank of any Note, or
      any
      note evidencing any of the Obligations, or the compromise of the liability
      of
      any of the Guarantors of the Obligations; or

    

    (d)   
      failure
      of the Bank to resort to any other security or to pursue the Borrower or any
      other obligor liable for any of the Obligations before resorting to remedies
      against the Collateral.

    

    13.2. Entire
      Agreement.
      This
      Agreement and the other Loan Documents (i) are valid, binding and enforceable
      against the Borrower and the Bank in accordance with their respective provisions
      and no conditions exist as to their legal effectiveness; (ii) constitute the
      entire agreement between the parties with respect to the subject matter hereof
      and thereof; and (iii) are the final expression of the intentions of the
      Borrower and the Bank. No promises, either expressed or implied, exist between
      the Borrower and the Bank, unless contained herein or therein. This Agreement,
      together with the other Loan Documents, supersedes all negotiations,
      representations, warranties, commitments, term sheets, discussions,
      negotiations, offers or contracts (of any kind or nature, whether oral or
      written) prior to or contemporaneous with the execution hereof with respect
      to
      any matter, directly or indirectly related to the terms of this Agreement and
      the other Loan Documents. This Agreement and the other Loan Documents are the
      result of negotiations among the Bank, the Borrower and the other parties
      thereto, and have been reviewed (or have had the opportunity to be reviewed)
      by
      counsel to all such parties, and are the products of all parties. Accordingly,
      this Agreement and the other Loan Documents shall not be construed more strictly
      against the Bank merely because of the Bank’s involvement in their
      preparation.

    

    13.3. Amendments;
      Waivers.
      No
      delay on the part of the Bank in the exercise of any right, power or remedy
      shall operate as a waiver thereof, nor shall any single or partial exercise
      by
      the Bank of any right, power or remedy preclude other or further exercise
      thereof, or the exercise of any other right, power or remedy. No amendment,
      modification or waiver of, or consent with respect to, any provision of this
      Agreement or the other Loan Documents shall in any event be effective unless
      the
      same shall be in writing and acknowledged by the Bank, and then any such
      amendment, modification, waiver or consent shall be effective only in the
      specific instance and for the specific purpose for which given.

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    13.4. WAIVER
      OF DEFENSES.
      THE
      BORROWER, ON BEHALF OF ITSELF AND ANY GUARANTOR OF ANY OF THE OBLIGATIONS,
      WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF
      WHICH THE BORROWER MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY THE
      BANK
      IN ENFORCING THIS AGREEMENT. PROVIDED THE BANK ACTS IN GOOD FAITH, THE BORROWER
      RATIFIES AND CONFIRMS WHATEVER THE BANK MAY DO PURSUANT TO THE TERMS OF THIS
      AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY
      FINANCIAL ACCOMMODATION TO THE BORROWER.

    

    13.5. FORUM
      SELECTION AND CONSENT TO JURISDICTION.
      ANY
      LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
      AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
      EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
      DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING
      IN
      THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE BANK FROM BRINGING
      SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. THE BORROWER HEREBY
      EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
      STATE
      OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT
      OF
      ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE BORROWER
      FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
      POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.
      THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
      PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
      OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE
      AND
      ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
      FORUM.

    

    13.6. WAIVER
      OF JURY TRIAL.
      THE
      BANK AND THE BORROWER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT
      WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY,
      ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
      ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF
      THE
      OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
      AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
      HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN
      CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF
      DEALING IN WHICH THE BANK AND THE BORROWER ARE ADVERSE PARTIES, AND EACH AGREES
      THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
      A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY
      FINANCIAL ACCOMMODATION TO THE BORROWER.

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

    13.7. Assignability.
      The
      Bank may at any time assign the Bank’s rights in this Agreement, the other Loan
      Documents, the Obligations, or any part thereof and transfer the Bank’s rights
      in any or all of the Collateral, and the Bank thereafter shall be relieved
      from
      all liability with respect to such Collateral; provided, however, that if an
      Event of Default does not exist, the Bank shall not make such assignment without
      the prior written consent of the Borrower. In addition, the Bank may at any
      time
      sell one or more participations in the Loans. The Borrower may not sell or
      assign this Agreement, or any other agreement with the Bank or any portion
      thereof, either voluntarily or by operation of law, without the prior written
      consent of the Bank. This Agreement shall be binding upon the Bank and the
      Borrower and their respective legal representatives and successors. All
      references herein to the Borrower shall be deemed to include any successors,
      whether immediate or remote. In the case of a joint venture or partnership,
      the
      term “Borrower” shall be deemed to include all joint venturers or partners
      thereof, who shall be jointly and severally liable hereunder.

    

    13.8. Confirmations.
      The
      Borrower and the Bank agree from time to time, upon written request received
      by
      it from the other, to confirm to the other in writing the aggregate unpaid
      principal amount of the Loans then outstanding under such Note.

    

    13.9. Confidentiality.
      The
      Bank agrees to use commercially reasonable efforts (equivalent to the efforts
      the Bank applies to maintain the confidentiality of its own confidential
      information) to maintain as confidential all information provided to it by
      the
      Borrower, including all information designated as confidential, except that
      the
      Bank may disclose such information (a) to Persons employed or engaged by the
      Bank in evaluating, approving, structuring or administering the Loans; (b)
      to
      any assignee or participant or potential assignee or participant that has agreed
      to comply with the covenant contained in this Section
      13.9
      (and any
      such assignee or participant or potential assignee or participant may disclose
      such information to Persons employed or engaged by them as described in clause
      (a) above); (c) as required or requested by any federal or state regulatory
      authority or examiner, or any insurance industry association, or as reasonably
      believed by the Bank to be compelled by any court decree, subpoena or legal
      or
      administrative order or process; (d) as, on the advice of the Bank’s counsel, is
      required by law; (e) in connection with the exercise of any right or remedy
      under the Loan Documents or in connection with any litigation to which the
      Bank
      is a party; (f) to any nationally recognized rating agency that requires access
      to information about the Bank’s investment portfolio in connection with ratings
      issued with respect to the Bank; (g) to any Affiliate of the Bank who may
      provide Bank Products to the Borrower or any Subsidiary, or (h) that ceases
      to
      be confidential through no fault of the Bank.

    

    13.10. Binding
      Effect.
      This
      Agreement shall become effective upon execution by the Borrower and the Bank.
      If
      this Agreement is not dated or contains any blanks when executed by the
      Borrower, the Bank is hereby authorized, without notice to the Borrower, to
      date
      this Agreement as of the date when it was executed by the Borrower, and to
      complete any such blanks according to the terms upon which this Agreement is
      executed.

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

    13.11. Governing
      Law.
      This
      Agreement, the Loan Documents and any Note shall be delivered and accepted
      in
      and shall be deemed to be contracts made under and governed by the internal
      laws
      of the State of Illinois (but giving effect to federal laws applicable to
      national banks) applicable to contracts made and to be performed entirely within
      such state, without regard to conflict of laws principles.

    

    13.12. Enforceability.
      Wherever 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, unenforceable or invalid under any
      jurisdiction, such provision shall as to such jurisdiction, be severable and
      be
      ineffective to the extent of such prohibition or invalidity, without
      invalidating the remaining provisions of this Agreement or affecting the
      validity or enforceability of such provision in any other
      jurisdiction.

    

    13.13. Survival
      of Borrower Representations.
      All
      covenants, agreements, representations and warranties made by the Borrower
      herein shall, notwithstanding any investigation by the Bank, be deemed material
      and relied upon by the Bank and shall survive the making and execution of this
      Agreement and the Loan Documents and the issuance of any Note, and shall be
      deemed to be continuing representations and warranties until such time as the
      Borrower has fulfilled all of its Obligations to the Bank, and the Bank has
      been
      indefeasibly paid in full in cash. The Bank, in extending financial
      accommodations to the Borrower, is expressly acting and relying on the aforesaid
      representations and warranties.

    

    13.14. Extensions
      of Bank’s Commitment.
      This
      Agreement shall secure and govern the terms of (i) any extensions or renewals
      of
      the Bank’s commitment hereunder, and (ii) any replacement note executed by the
      Borrower and accepted by the Bank in its sole and absolute discretion in
      substitution for any Note.

    

    13.15. Time
      of Essence.
      Time is
      of the essence in making payments of all amounts due the Bank under this
      Agreement and in the performance and observance by the Borrower of each
      covenant, agreement, provision and term of this Agreement.

    

    13.16. Counterparts;
      Facsimile Signatures.
      This
      Agreement may be executed in any number of counterparts and by the different
      parties hereto on separate counterparts and each such counterpart shall be
      deemed to be an original, but all such counterparts shall together constitute
      but one and the same Agreement. Receipt of an executed signature page to this
      Agreement by facsimile or other electronic transmission shall constitute
      effective delivery thereof. Electronic records of executed Loan Documents
      maintained by the Bank shall deemed to be originals thereof.

    
      
        
        

      

      
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    13.17. Notices.
      Except
      as otherwise provided herein, the Borrower waives all notices and demands in
      connection with the enforcement of the Bank’s rights hereunder. All notices,
      requests, demands and other communications provided for hereunder shall be
      in
      writing and addressed as follows:

    
 

    

    
      	
              To
                the Borrower:

            	
              Primoris
                Corporation

              26000
                Commercentre Drive

              Lake
                Forest, California 92630

              Attention:
                John P. Schauerman

              John
                M. Perisich, Esq.

            
	 	 
	
              With
                a copy to:

            	
              Paul,
                Hastings, Janofsky & Walker LLP

              695
                Town Center Drive

              Seventeenth
                Floor

              Costa
                Mesa, California 92626

              Attention:
                Douglas A. Schaaf, Esq. 

            
	 	 
	
              To
                the Bank:

            	
              LaSalle
                Bank National Association

              135
                South LaSalle Street

              Chicago,
                Illinois 60603

              Attention:
                Steve Trepiccione

              Construction
                and Engineering Division 

            
	 	 
	
              With
                copy to:

            	
              O’Keefe
                Lyons & Hynes, LLC

              30
                North LaSalle Street, Suite 4100

              Chicago,
                Illinois 60602

              Attention:
                James E. Carroll,
                Esq.

            

    

    

    or,
      as to
      each party, at such other address as shall be designated by such party in a
      written notice to each other party complying as to delivery with the terms
      of
      this subsection. All notices addressed as above shall be deemed to have been
      properly given (i) if served in person, upon acceptance or refusal of delivery;
      (ii) if mailed by certified or registered mail, return receipt requested,
      postage prepaid, on the third (3rd) day following the day such notice is
      deposited in any post office station or letter box; or (iii) if sent by
      recognized overnight courier, on the first (1st) day following the day such
      notice is delivered to such carrier. No notice to or demand on the Borrower
      in
      any case shall entitle the Borrower to any other or further notice or demand
      in
      similar or other circumstances.

    

    13.18. Release
      of Claims Against Bank.
      In
      consideration of the Bank making the Loans, the Borrower and all other Obligors
      do each hereby release and discharge the Bank of and from any and all claims,
      harm, injury, and damage of any and every kind, known or unknown, legal or
      equitable, which any Obligor may have against the Bank from the date of their
      respective first contact with the Bank until the date of this Loan Agreement,
      including any claim arising from any reports (environmental reports, surveys,
      appraisals, etc.) prepared by any parties hired or recommended by the Bank.
      The
      Borrower and all other Obligors confirm to Bank that they have reviewed the
      effect of this release with competent legal counsel of their choice, or have
      been afforded the opportunity to do so, prior to execution of this Agreement
      and
      the Loan Documents and do each acknowledge and agree that the Bank is relying
      upon this release in extending the Loans to the Borrower.

    
      
        
        

      

      
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    13.19. Costs,
      Fees and Expenses.
      The
      Borrower shall pay or reimburse the Bank for all reasonable costs, fees and
      expenses incurred by the Bank or for which the Bank becomes obligated in
      connection with the negotiation, preparation, consummation, collection of the
      Obligations or enforcement of this Agreement, the other Loan Documents and
      all
      other documents provided for herein or delivered or to be delivered hereunder
      or
      in connection herewith (including any amendment, supplement or waiver to any
      Loan Document), or
      during
      any workout, restructuring or negotiations in respect thereof, including
      reasonable consultants’ fees and attorneys’ fees and time charges of counsel to
      the Bank, which shall also include attorneys’ fees and time charges of attorneys
      who may be employees of the Bank or any Affiliate of the Bank, plus costs and
      expenses of such attorneys or of the Bank; search fees, costs and expenses;
      and
      all taxes payable in connection with this Agreement or the other Loan Documents,
      whether or not the transaction contemplated hereby shall be consummated. In
      furtherance of the foregoing, the Borrower shall pay any and all stamp and
      other
      taxes, UCC search fees, filing fees and other costs and expenses in connection
      with the execution and delivery of this Agreement, any Note and the other Loan
      Documents to be delivered hereunder, and agrees to save and hold the Bank
      harmless from and against any and all liabilities with respect to or resulting
      from any delay in paying or omission to pay such costs and expenses. That
      portion of the Obligations consisting of costs, expenses or advances to be
      reimbursed by the Borrower to the Bank pursuant to this Agreement or the other
      Loan Documents which are not paid on or prior to the date hereof shall be
      payable by the Borrower to the Bank on demand. If at any time or times hereafter
      the Bank: (a) employs counsel for advice or other representation
      (i) with respect to this Agreement or the other Loan Documents,
      (ii) to represent the Bank in any litigation, contest, dispute, suit or
      proceeding or to commence, defend, or intervene or to take any other action
      in
      or with respect to any litigation, contest, dispute, suit, or proceeding
      (whether instituted by the Bank, the Borrower, or any other Person) in any
      way
      or respect relating to this Agreement, the other Loan Documents or the
      Borrower’s business or affairs, or (iii) to enforce any rights of the Bank
      against the Borrower or any other Person that may be obligated to the Bank
      by
      virtue of this Agreement or the other Loan Documents; (b) takes any action
      to protect, collect, sell, liquidate, or otherwise dispose of any of the
      Collateral; and/or (c) attempts to or enforces any of the Bank’s rights or
      remedies under the Agreement or the other Loan Documents, the costs and expenses
      incurred by the Bank in any manner or way with respect to the foregoing, shall
      be part of the Obligations, payable by the Borrower to the Bank on
      demand.

    

    13.20. Indemnification.
      The
      Borrower agrees to defend (with counsel satisfactory to the Bank), protect,
      indemnify, exonerate and hold harmless each Indemnified Party from and against
      any and all liabilities, obligations, losses, damages, penalties, actions,
      judgments, suits, claims, costs, expenses and distributions of any kind or
      nature (including the disbursements and the reasonable fees of counsel for
      each
      Indemnified Party thereto, which shall also include, without limitation,
      reasonable attorneys’ fees and time charges of attorneys who may be employees of
      any Indemnified Party), which may be imposed on, incurred by, or asserted
      against, any Indemnified Party (whether direct, indirect or consequential and
      whether based on any federal, state or local laws or regulations, including
      securities laws, Environmental Laws, commercial laws and regulations, under
      common law or in equity, or based on contract or otherwise) in any manner
      relating to or arising out of this Agreement or any of the Loan Documents,
      or
      any act, event or transaction related or attendant thereto, the preparation,
      execution and delivery of this Agreement and the Loan Documents, including
      the
      making or issuance and management of the Loans, the use or intended use of
      the
      proceeds of the Loans, the enforcement of the Bank’s rights and remedies under
      this Agreement, the Loan Documents, any Note, any other instruments and
      documents delivered hereunder, or under any other agreement between the Borrower
      and the Bank; provided, however, that the Borrower shall not have any
      obligations hereunder to any Indemnified Party with respect to matters
      determined by a court of competent jurisdiction by final and nonappealable
      judgment to have been caused
      by
      or resulting from the willful misconduct or gross negligence of such Indemnified
      Party. To the extent that the undertaking to indemnify set forth in the
      preceding sentence may be unenforceable because it violates any law or public
      policy, the Borrower shall satisfy such undertaking to the maximum extent
      permitted by applicable law. Any liability, obligation, loss, damage, penalty,
      cost or expense covered by this indemnity shall be paid to each Indemnified
      Party on demand, and failing prompt payment, together with interest thereon
      at
      the Default Rate from the date incurred by each Indemnified Party until paid
      by
      the Borrower, shall be added to the Obligations of the Borrower and be secured
      by the Collateral. The provisions of this Section shall survive the satisfaction
      and payment of the other Obligations and the termination of this
      Agreement.

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

    13.21. Revival
      and Reinstatement of Obligations.
      If the
      incurrence or payment of the Obligations by any Obligor or the transfer to
      the
      Bank of any property should for any reason subsequently be declared to be void
      or voidable under any state or federal law relating to creditors’ rights,
      including provisions of the Bankruptcy Code relating to fraudulent conveyances,
      preferences, or other voidable or recoverable payments of money or transfers
      of
      property (collectively, a “Voidable Transfer”), and if the Bank is required to
      repay or restore, in whole or in part, any such Voidable Transfer, or elects
      to
      do so upon the reasonable advice of its counsel, then, as to any such Voidable
      Transfer, or the amount thereof that the Bank is required or elects to repay
      or
      restore, and as to all reasonable costs, expenses, and attorneys fees of the
      Bank, the Obligations shall automatically shall be revived, reinstated, and
      restored and shall exist as though such Voidable Transfer had never been
      made.

    

    13.22. Customer
      Identification - USA Patriot Act Notice.
      The
      Bank hereby notifies the Borrower that pursuant to the requirements of the
      USA
      Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001)
      (the
“Act”), and the Bank’s policies and practices, the Bank is required to obtain,
      verify and record certain information and documentation that identifies the
      Borrower, which information includes the name and address of the Borrower and
      such other information that will allow the Bank to identify the Borrower in
      accordance with the Act.

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Borrower and the Bank have executed this Loan and Security
      Agreement as of the date first above written.

    
       

      
        
          
            
              	 	 	
                      PRIMORIS
                        CORPORATION,
a
                        Nevada corporation 

                    
	 	 	 	 
	 	 	 	 
	
                    	 	
                      By: 

                    	/s/ John
                      Schauerman
	
                    	 	
                      Name: 

                    	
                      
John
                      Schauerman
	 	 	
                      Title:

                    	
                      
SVP 
	 	 	 	
                      
  

            

          

        

        
           

          
            
              
                
                  	 	 	 
	 	 	
                          Agreed
                            and accepted: 

                        
	 	 	 
	 	 	
                          LASALLE
                            BANK NATIONAL ASSOCIATION,
a
                            national banking association 

                        
	 	 	 	 
	 	 	 	 
	
                        	 	
                          By: 

                        	/s/ Steve
                          Trepiccione
	
                        	 	
                          Name: 

                        	
                          
Steve
                          Trepiccione
	 	 	
                          Title:

                        	
                          
Senior
                          Vice President 
	 	 	 	
                          
  

                

              

              

            

          

           

          
            
              
              

            

            
              60Exhibit
      10.24

     

    FIRST
      AMENDMENT TO LOAN AND SECURITY AGREEMENT

     

    Reference
      is made to that certain Loan and Security Agreement dated as of March 22,
      2007 (the “Loan and Security Agreement”) between the undersigned Primoris
      Corporation (the “Borrower”) and LaSalle Bank National Association (the “Bank”).
      All capitalized terms used herein without definition shall have the same
      meanings herein as those terms have in the Loan and Security Agreement. The
      Borrower and Bank hereby amend the Loan and Security Agreement as set forth
      below.

     

    	1.  	
            The
              definition of “Pledge Agreements” in Section 1.1 of the Loan and Security
              Agreement is hereby deleted in its
              entirety.

          

     

    	2.  	
            Section
              3.2(a) of the Loan and Security Agreement is hereby deleted in its
              entirety.

          

     

    	3.  	
            Section
              3.2(b) of the Loan and Security Agreement is hereby deleted in its
              entirety.

          

     

    	4.  	
            The
              current Section 3.2(c) of the Loan and Security Agreement shall be
              renumbered as Section 3.2(b) of the Loan and Security
              Agreement.

          

     

    	5.  	
            The
              current Section 3.2(d) of the Loan and Security Agreement shall be
              renumbered as Section 3.2(b) of the Loan and Security
              Agreement.

          

     

    	6.  	
            Section
              6.1(c) of the Loan and Security Agreement is hereby deleted in its
              entirety.

          

     

    	7.  	
            Section
              6.2 of the Loan and Security Agreement is hereby deleted and the following
              is inserted therefore:

          

     

    6.2 Other
      Collateral.
      In
      addition, to the extent required by the Bank per Section 8.20 and Section
      12.5(j) hereof, the Obligations are also secured by the Control
      Agreements.

     

    	8.  	
            Section
              8.25 of the Loan and Security Agreement is hereby deleted in its
              entirety.

          

     

    Except
      as
      specifically amended herein, the Loan and Security Agreement shall continue
      in
      full force and effect in accordance with its original terms. Reference to this
      specific Amendment need not be made in the Loan and Security Agreement or in
      any
      other instrument or document executed in connection therewith, any reference
      in
      any such items to the Loan and Security Agreement being sufficient to refer
      to
      the Loan and Security Agreement as amended hereby.

     

    This
      Amendment may be executed in counterpart, and by facsimile and by the different
      parties on different counterpart signature pages, which taken together shall
      constitute one and the same Agreement. This Amendment shall be governed by
      internal laws of the State of Illinois.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Dated
      as
      of this ____ day of ____________, 2007

    

      
        	 	
                LA
                  SALLE BANK NATIONAL ASSOCIATION

              
	 	 
	 	
                By:
                  

              	
                /s/
                  George Linhart

              
	 	 	
                George
                  Linhart

              
	 	 	 
	 	
                Its:

              	
                Senior
                  Vice President

              
	 	 	 
	 	 	 
	 	
                PRIMORIS
                  CORPORATION

              
	 	 
	 	
                By:
                  

              	
                /s/
                  A. Theeuwes

              
	 	 	
                A.
                  Theeuwes

              
	 	 	 
	 	
                Its:

              	
                Chief
                  Financial Officer

              

      

    

     

    
      
         

      

      
        -2-

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