Document:

Exhibit 10.2

 

Loan No. 0426195000

 

FIFTH AMENDMENT TO

REVOLVING LINE OF CREDIT LOAN AGREEMENT

 

This Fifth Amendment to Revolving Line of Credit
Loan Agreement (this “Amendment”)
is entered into by and between American AgCredit, FLCA (“Lender”) and Maui Land &
Pineapple Company, Inc., a Hawaii corporation (“Borrower”), to be effective as of October 9,
2009 (the “Effective Date”).

 

RECITALS

 

A.   Borrower and Lender are parties to a Revolving
Line of Credit Loan Agreement dated September 1, 2005 and amended by a
First Amendment dated as of December 4, 2006, a Second Amendment dated as
of September 30, 2008, a Third Amendment dated as of December 31,
2008, and a Fourth Amendment dated as of December 31, 2008 (as
it may be further amended, restated, modified or supplemented from time to time, the “Credit Agreement”).  (Capitalized terms used
but not otherwise defined in this Amendment shall have the meanings given to
them in the Credit Agreement.)

 

B.   Borrower
has requested that Lender agree to modify certain terms of the Credit
Agreement.  Lender is willing to do so on
the terms and conditions set forth in this Amendment.

 

Accordingly
the parties agree as follows:

 

1.                                       Conditions Precedent.  The
modification provided for herein is hereby granted provided that the following
conditions precedent are satisfied by a date acceptable to Lender in its sole
discretion:

 

1.1                                 Lender shall have received
one or more counterparts of this Amendment duly executed and delivered by
Borrower and each Guarantor.

 

1.2                                 All of the representations
and warranties contained in the Credit Agreement shall continue to be true and
correct and remain in full force and effect as of the date of this Amendment.

 

1.3                                 Borrower shall have paid to
Lender a fee (the “Amendment Fee”)
in the amount of $125,000.00.  The
Amendment Fee shall be considered fully earned and non-refundable upon its
receipt by Lender and no portion thereof shall be refundable to Borrower under
any circumstances.

 

Notwithstanding
the date on which the above conditions have been satisfied, the interest
changes provided for in this Amendment shall be deemed to have become effective
as of October 1, 2009 and the new interest rates set forth in this
Amendment shall be effective retroactively to October 1, 2009.

 

2.                                       Amendments.  Provided that
the conditions specified in Section 1 of this Amendment have been
satisfied, the Credit Agreement shall be modified and amended as follows:

 

2.1                                 Amended and Restated
Definitions.  The
following definitions set forth in Section 1 of the Agreement are hereby
amended and restated to read as follows:

 

“Applicable
Spread” shall mean 4.25%.

 

“Base
Rate” shall mean the LIBOR Market Index Rate.

 

1

 

“Cash
Equivalents” shall mean (a) securities issued, guaranteed or insured by
the United States of America or any of its agencies with maturities of not more
than one year from the date acquired; (b) certificates of deposit with
maturities of not more than one year from the date acquired issued by a United
States federal or state chartered commercial bank of recognized standing, or a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development, or a political
subdivision of any such country, acting through a branch or agency, which bank
has capital and unimpaired surplus in excess of $500,000,000 and which bank or
its holding company has a short-term commercial paper rating of at least A-2 or
the equivalent by S&P or at least P-2 or the equivalent by Moody’s; (c) reverse
repurchase agreements with terms of not more than seven days from the date
acquired, for securities of the type described in clause (a) above and
entered into only with commercial banks having the qualifications described in
clause (b) above; (d) commercial paper issued by any Person
incorporated under the laws of the United States of America or any State
thereof and rated at least A-2 or the equivalent thereof by S&P or at least
P-2 or the equivalent thereof by Moody’s, in each case with maturities of not
more than one year from the date acquired; and (e) investments in money
market funds registered under the Investment Company Act of 1940, as amended,
which have net assets of at least $500,000,000 and at least 85% of whose assets
consist of securities and other obligations of the type described in clauses (a) through
(d) above.

 

“GAAP”
shall mean United States generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.

 

“Permitted
Encumbrances” shall mean the following encumbrances: (i) Liens for taxes
or assessments or other governmental charges or levies, either not yet due and
payable or to the extent that nonpayment thereof is permitted by the terms of
this Agreement; (ii) pledges or deposits securing obligations under
workmen’s compensation, unemployment insurance, social security or public
liability laws or similar legislation; (iii) pledges or deposits securing
bids, tenders, contracts (other than contracts for the payment of money) or
leases to which Borrower or any Guarantor is a party as lessee made in the
ordinary course of business; (iv) workers’, mechanics’, suppliers’ or
similar Liens arising in the ordinary course of business that are either not
yet due and payable or that are being contested in good faith by appropriate
proceedings and for which Borrower or any Guarantor has established adequate
reserves; (v) carriers’, warehousemen’s, or other similar possessory Liens
arising in the ordinary course of business; (vi) an attachment or judgment
Lien, but only for a period of thirty (30) days following attachment of such
Lien and such attachment or judgment lien shall cease to be a Permitted
Encumbrance if the obligation that it secures has not been satisfied or bonded
during such thirty (30) day period; (vii) zoning restrictions, easements,
licenses, or other restrictions on the use of real property or other minor
irregularities in title (including leasehold title) thereto, so long as the
same do not materially impair the use, value, or marketability of such real
property, leases or leasehold estates; (viii) Liens securing indebtedness
owed by a Subsidiary to Borrower; (ix) security interests securing
purchase money indebtedness in capital assets, the acquisition of which is
permitted by this Agreement, and so long as the security interest does not
encumber any asset other than the asset acquired; (x) any Lien listed as a
Permitted Encumbrance on the Disclosure Schedule referred to in Exhibit A
to the Fifth Amendment; and (xi) the 

 

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refinancing
of the real property mortgages referred to in the Disclosure Schedule referred
to in Exhibit A to the Fifth Amendment, provided that such refinancing
covers the same property covered by the original mortgages, secures a principal
amount not in excess of that secured by such mortgages on the date of
refinancing, and the terms of such refinancing have all been negotiated at arms
length and are on fair market terms..

 

2.2                                 New Definitions.  The following definitions are hereby added to
Section 1 of the Agreement:

 

“Capitalized
Lease Obligation” shall mean obligations under a lease (to pay rent or other
amounts under any lease or other arrangement conveying the right to use) that
are required to be capitalized for financial reporting purposes in accordance
with GAAP.  The amount of a Capitalized
Lease Obligation is the capitalized amount of such obligation determined in
accordance with GAAP.

 

“Consolidated
Adjusted EBITDA” shall mean, for any period, for Borrower and its Subsidiaries
on a consolidated basis, the sum (without duplication) of: (a) Consolidated
Net Income; plus (b) the sum of (i) Federal, state, local, and
foreign income taxes, (ii) interest expense (including the interest
portion of any capitalized lease obligations) and (iii) depletion,
depreciation and amortization; plus (c) restructuring expenses; plus (d) the
sum of extraordinary expenses and noncash expenses; minus (e) the sum of
extraordinary gains and noncash gains.

 

“Derivatives
Contract” shall mean (a) any transaction (including any master agreement,
confirmation or other agreement with respect to any such transaction) now
existing or hereafter entered into by Borrower or any of its Subsidiaries (i) which
is a rate swap transaction, swap option, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, currency swap
transaction, cross-currency rate swap transaction, currency option, credit
protection transaction, credit swap, credit default swap, credit default
option, total return swap, credit spread transaction, repurchase transaction,
reverse repurchase transaction, buy/sell-back transaction, securities lending
transaction, weather index transaction or forward purchase or sale of a security,
commodity or other financial instrument or interest (including any option with
respect to any of these transactions) or (ii) which is a type of
transaction that is similar to any transaction referred to in clause (i) above
that is currently, or in the future becomes, recurrently entered into in the
financial markets (including terms and conditions incorporated by reference in
such agreement) and which is a forward, swap, future, option or other
derivative on one or more rates, currencies, commodities, equity securities or
other equity instruments, debt securities or other debt instruments, economic
indices or measures of economic risk or value, or other benchmarks against
which payments or deliveries are to be made, and (b) any combination of
these transactions.

 

“Equity
Interest” shall mean, with respect to any Person, any share of capital stock of
(or other ownership or profit interests in) such Person, any warrant, option or
other right for the purchase or other acquisition from such Person of any share
of capital stock of (or other ownership or profit interests in) such Person
whether or not certificated, any security convertible into or exchangeable for
any share of capital stock of (or other ownership or profit interests in) such
Person or warrant, right or option for the purchase or other acquisition from
such Person of such shares (or such other interests), and any other ownership
or profit interest in such Person (including, without limitation, partnership, 

 

3

 

member
or trust interests therein), whether voting or nonvoting, and whether or not
such share, warrant, option, right or other interest is authorized or otherwise
existing on any date of determination.

 

“Fifth
Amendment” shall mean the Fifth Amendment to Revolving Line of Credit Loan
Agreement between Borrower and Lender dated on or about September 30,
2009.

 

“Governmental Authority” shall mean any national,
state or local government (whether domestic or foreign), any political
subdivision thereof or any other governmental, quasi-governmental, judicial,
administrative, public or statutory instrumentality, authority, body, agency,
bureau, commission, board, department or other entity (including, without
limitation, the Federal Deposit Insurance Corporation, the Comptroller of the
Currency or the Federal Reserve Board, any central bank or any comparable
authority) or any arbitrator with authority to bind a party at law.

 

“Indebtedness”
shall mean , with respect to a Person, at the time of computation thereof, all
of the following (without duplication): (a) all obligations of such Person
in respect of money borrowed; (b) all obligations of such Person (other
than trade debt incurred in the ordinary course of business), whether or not
for money borrowed (i) represented by notes payable, or drafts accepted,
in each case representing extensions of credit, (ii) evidenced by bonds,
debentures, notes or similar instruments, or (iii) constituting purchase
money indebtedness, conditional sales contracts, title retention debt
instruments or other similar instruments, upon which interest charges are
customarily paid or that are issued or assumed as full or partial payment for
property; (c) Capitalized Lease Obligations of such Person; (d) all
reimbursement obligations of such Person under or in respect of any letters of
credit or acceptances (whether or not the same have been presented for
payment); (e) all Off-Balance Sheet Obligations of such Person; (f) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Mandatorily Redeemable Stock issued by such
Person or any other Person, valued at the greater or its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends; (g) net
obligations under any Derivative Contract (which shall be deemed to have an
amount equal to the termination value thereof at such time but in no event
shall be less than zero); and (h) all Indebtedness of other Persons which (i) such
Person has Guaranteed or is otherwise recourse to such Person or (ii) is
secured by a Lien on any property of such Person.  For purposes of this definition, (x) the
amount of any Indebtedness represented by a guaranty or other similar
instrument shall be the lesser of the principal amount of the obligations
guaranteed and outstanding and the maximum amount for which the guaranteeing
Person may be liable pursuant to the terms of the guaranty, and (y) the
amount of any Indebtedness described in clause (h)(ii) above shall be the
lower of the amount of the obligation and the fair market value of the assets
securing such obligation.

 

“LIBOR
Market Rate Index” shall mean, for any day, the LIBOR Rate as of that day for
one-month deposits in U.S. Dollars at approximately 9:00 a.m. Pacific time
for such day (or if such day is not a Business Day, the immediately preceding
Business Day).  The LIBOR Market Index
Rate shall be determined on a daily basis.

 

“Mandatorily
Redeemable Stock” shall mean, with respect to any Person, any Equity Interest
of such Person which by the terms of such Equity Interest (or by the terms of
any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise, (a) matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than an Equity Interest to the extent redeemable in exchange for common
stock or other equivalent common Equity 

 

4

 

Interests
at the option of the issuer of such Equity Interest), (b) is convertible
into or exchangeable or exercisable for Indebtedness or Mandatorily Redeemable
Stock, or (c) is redeemable at the option of the holder thereof, in whole
or part (other than an Equity Interest which is redeemable solely in exchange
for common stock or other equivalent common Equity Interests), in each case on
or prior to the date on which all Loans are scheduled to be due and payable in
full.

 

“MPC”
shall mean Maui Pineapple Company, Ltd., a Hawaii corporation, or a successor
entity that holds all or substantially all of its assets pursuant to a merger,
sale or other transaction that has been approved by Lender in its reasonable
discretion.

 

“Nonrecourse
Indebtedness” shall mean, with respect to a Person, Indebtedness for borrowed
money in respect of which recourse for payment (except for customary exceptions
for fraud, misapplication of funds, environmental indemnities, and other
similar customary exceptions to nonrecourse liability (but not exceptions
relating to bankruptcy, insolvency, receivership or other similar events) in a
form reasonably acceptable to Lender) is contractually limited to specific
assets of such Person encumbered by a Lien securing such Indebtedness.

 

“Off-Balance
Sheet Obligations” shall mean liabilities and obligations of Borrower, any
Subsidiary or any other Person in respect of “off-balance sheet arrangements”
(as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the
Securities Act) which Borrower would be required to disclose in the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
section of Borrower’s report on Form 10-Q or Form 10-K (or their
equivalents) which Borrower is required to file with the SEC (or any
Governmental Authority substituted therefor).

 

“Total
Liabilities” means, as to any Person as of a given date, all liabilities which
would, in conformity with GAAP, be properly classified as a liability on a
consolidated balance sheet of such Person as of such date.

 

“Unconsolidated
Affiliate” shall mean, with respect to any Person, any other Person in whom
such Person holds an Investment, which Investment is accounted for in the
financial statements of such Person on an equity basis of accounting and whose
financial results would not be consolidated under GAAP with the financial
results of such Person on the consolidated financial statements of such Person.

 

2.3                                 Modified Definitions.  The following definitions set forth in Section 1
of the Agreement are hereby modified as follows:

 

(a)                                  The definition of “Fixed
Rate Tranche” is hereby amended to delete the words “and the One Year Fixed
Rate Tranche” and to add the word “and” before the words “Six Month Fixed Rate
Tranche.”

 

(b)                                 The definition of “Interest
Period” is hereby amended to delete the words “or twelve (12) months add the
word “or” before the words “six (6) months.”

 

2.4                                 Deleted Definitions.  The following definitions set forth in Section 1
of the Agreement are hereby deleted:

 

“Draw
Period”

 

“One
Year Fixed Rate Tranche”

 

“Term
Loan”

 

5

 

2.5                                 Amendment of Section 3(a).  Section 3(a) of the Agreement is
hereby amended to add the words “day before” prior to the words “Maturity Date”
on line 2 and to delete the third and fourth sentences thereof.

 

2.6                                 Amendment of Section 3(c).  Section 3(c) of the Agreement is
hereby amended to delete the last sentence of such section and replace it with
the following: “Notwithstanding any other provision of this Agreement to the
contrary, from and after October 1, 2009, in no event shall the Base Rate
be less than five and one-half of one percent (5.50%) per annum.”

 

2.7                                 Amendment of Section 3(d)(2).  Section 3(d)(2) of the Agreement is
hereby amended to (i) delete “this Section 3(d)(2)” and replace it
with “Section 3(d)(1)” in each place where it appears in such Section, (ii) renumber
such subsection as Section 3(d)(3), and (iii) insert the following as
new subsection 3(d)(2):

 

(2)                                  Interest on
Fixed Rate Tranches.  Each Fixed
Rate Tranche shall bear interest, from the Closing Date through the date on
which such Fixed Rate Tranche is paid in full, at a rate per annum equal to the
greater of (i) five and one-half of one percent (5.50%) or (ii) the
sum of (x) the applicable LIBOR Rate for such Fixed Rate Tranche, plus (y) the
Applicable Spread for the Interest Period then in effect for such Fixed Rate
Tranche.

 

2.8                                 Amendment of Section 3(i).  Section 3(i) of the Agreement is
hereby amended to delete “or Lender” from such Section, and to delete “Section 3(i)(3)”
and replace it with “Section 3(i)”.

 

2.9                                 Amendment of Section 4(b).  Section 4(b) of the Agreement is
hereby amended to delete “March 13, 2010” and replace it with “March 1,
2011” and to add the following sentence at the end thereof:  “Any extension of the Maturity Date shall be
in the sole and absolute discretion of Lender.”

 

2.10                           Amendment and Restatement of
Section 4(d).  Section 4(d) is
hereby amended and restated to read as follows:

 

(d)                                 Late Charge.  If any payment required under this Agreement
is not paid within ten (10) days after it becomes due and payable,
Borrower shall pay a late charge for late payment to compensate Lender for the
loss of use of funds and for the expenses of handling the delinquent payment,
in an amount equal to four percent (4%) of such delinquent payment.  Such late charge shall be paid in any event
not later than the due date of the next subsequent installment of principal
and/or interest.  In the event the
maturity of the Obligations hereunder occurs or is accelerated, this Section shall
apply only to payments overdue prior to the time of such acceleration.  This Section shall not be deemed to be a
waiver of Lender’s right to accelerate payment of any of the Obligations as
permitted under the terms of this Agreement.

 

2.11                           Amendment of Section 4(e).  Section 4(e) of the Agreement is
hereby amended to (a) delete “one quarter of one-percent (.0.25%)” in the
first sentence and replacing it with “four-tenths of one percent (0.40%),” and (b) deleting
the third sentence and all the language following the third sentence.”

 

2.12                           Amendment of Section 6(d).  Section 6(d) of the Agreement is
hereby amended to delete the number “(1),” to delete “or the One Year Fixed
Rate Tranche,” to delete “; and” at the end of the paragraph formerly numbered “(1),”
and to delete paragraph (2) in its entirety.

 

6

 

2.13                           Amendment of Section 11.  Section 11 of the Agreement is hereby
amended as follows:

 

2.13.1                  Section 11(g)(2) of
the Agreement is amended and restated to read as follows:

 

(2)                                  Quarterly
Financial Statements, Projected Financial Statements and Operating and Capital
Plan Updates.  No later
than sixty (60) days after the end of each Fiscal Quarter: (i) internally
prepared quarterly financial statements containing the same information
regularly generated by Borrower on its internal quarterly financial statements
and its quarterly filings with the Securities and Exchange Commission on Form 10-Q,
accompanied by a compliance certificate from Borrower’s chief financial
officer, in the form attached hereto as Exhibit B, certifying that as of
the date of such financial statement there did not exist a Default or Event of
Default under this Agreement; (ii) projections of the financial statements
of the Borrower for the next six Fiscal Quarters, including a projected income
statement, balance sheet and cash flow statement of Borrower for the six Fiscal
Quarter period immediately following such Fiscal Quarter, which projection
shall state the assumptions used in the preparation thereof, include a
description and discussion of the variance of the performance projected in such
projected financial statements from the performance during the Fiscal Quarter
then ended, and include a commentary with respect to the performance of the
segments described in such projected financial statements, accompanied by a
certificate from Borrower’s chief financial officer certifying that such
financial projections represent Borrower’s best estimates and assumptions as to
performance during such period, which Borrower believes to be fair and
reasonable as of the time made in the light of then current and reasonably
foreseeable business conditions; (iii) an update of the Borrowers
operating and capital plan for the Fiscal Quarter then ended, which shall
include, without limitation, a segment overview, a review of objectives and
work streams, progress updates, a review of actions to date, a responsibility
matrix, and an outsourced, leased or sold update; (iv) a reconciliation, on
a rolling four quarter basis ending with the most recent Fiscal Quarter then
ended, of the actual Consolidated Adjusted EBITDA projected for each Fiscal
Quarter during such period to the actual Consolidated Adjusted EBITDA contained
in the quarterly financial statements provided by Borrower pursuant to this
Section; and (v) a leasing/occupancy status report, together with a
current rent roll, for any real property owned by Borrower that is used for
retail or commercial purposes;

 

2.13.2                  Section 11(g)(9) of the Agreement
is amended to delete the “and” at the end of such Section.

 

2.13.3                  Section 11(g)(10) of the Agreement
is amended and restated to read as follows:

 

(10)                            Consolidated
Cash Flow Forecast.  No later
than twenty (20) days following the end of each month, a consolidated forecast
of the cash flows of Borrower for the upcoming twenty-four month period, which
forecast shall state the assumptions used in the preparation thereof and be
accompanied by a certificate from Borrower’s chief financial officer certifying
that such forecast represents Borrower’s best estimate and assumption as to
performance during such period, which Borrower believes to be fair and
reasonable as of the time made in the light of then current and reasonably
foreseeable business conditions;

 

7

 

2.13.4      A new Section 11(g)(11) of the
Agreement is hereby added as follows:

 

(11)         Quarterly Conference Calls.  Promptly upon delivery of the financial
information described in Section 11(g)(2) above, Borrower’s chief
financial officer or his/her designee shall make himself/herself available, at
a time acceptable to Lender, for a conference call to discuss such information;
and

 

2.13.5      A new Section 11(g)(12) of the
Agreement is hereby added as follows:

 

(12)         Other Information.  Such other information regarding the
condition or operations, financial or otherwise, of Borrower or any Guarantor
as Lender may, from time to time, reasonably request.  All information provided by Borrower to
Lender pursuant to this Section shall be in form and substance satisfactory
to Lender in all respects.

 

2.14                           Amendment of Section 12(b).  Section 12(b) of the Agreement is
hereby amended to replace “and (iii)” with “(iii) all or a portion of the
assets of MPC; (iv) all or a portion of the Equity Interest held by
Borrower in MPC; and (v)”.

 

2.15                           Amendment of Section 12(d).  Section 12(d) of the Agreement is
hereby amended to replace “Collateral” with “any assets of Borrower,”.

 

2.16                           Amendment of Section 12(e).  Section 12(e) of the Agreement is
hereby amended to replace “Forty Million Dollars ($40,000,000)” with “Seven
Million Dollars ($7,000,000)” and “2005” with “2009”.

 

2.17                           Amendment and Restatement of
Section 12(i).  Section 12(i) of
the Agreement is hereby amended and restated to read as follows:

 

(i) 
Indebtedness.  Incur any
Indebtedness other than the Loan, except for Indebtedness disclosed on the
consolidated balance sheet of Borrower and its Subsidiaries dated as of September 30,
2009, provided, however, that (i) Borrower may incur up to $50,000,000 in
total Indebtedness outstanding at any time pursuant to that certain Amended and
Restated Credit Agreement, dated as of even date herewith, between Borrower,
Wells Fargo Bank, National Association, as administrative agent and sole lead
arranger, and the financial institutions party thereto; (ii) Borrower may
incur up to $250,000 in total Indebtedness outstanding at any time in
connection with the acquisition or lease of equipment used in the ordinary
course of its business; (iii) Borrower may incur Capitalized Lease
Obligations in the ordinary course of business; and (iv) the amount of
Indebtedness attributable to the convertible debt of Borrower in existence as
of the date hereof may be increased, provided that such increase arises solely
from the recalculation of the amount of such debt under GAAP based on a change
in the stock price of shares of Borrower (and not as a result of the issuance
of new Indebtedness).

 

2.18                           Amendment and Restatement of
Section 12(j).  Section 12(j) of
the Agreement is hereby amended and restated to read as follows:

 

(j) 
Total Liabilities.  Permit its
Total Liabilities to exceed $240,000,000 at any time, as calculated at the end
of each Fiscal Quarter.

 

2.19                           Addition of New Section 12(k).  A new Section 12(k) of the
Agreement is hereby added as follows:

 

8

 

(k)           Liquidity.  Permit its Liquidity, as of the end of any
calendar quarter, to be less than $8,000,000. 
As used herein, “Liquidity” shall mean the sum of (i) cash, (ii) Cash
Equivalents, (iii) publicly traded and publicly quoted marketable
securities acceptable to Lender Agent in its reasonable discretion, (iv) undisbursed
commitment under secured lines of credit available to Borrower, and (v) the
amount, if any, not to exceed $2,000,000, by which accounts receivable of the
Borrower exceed accounts payable of the Borrower, net, in connection with any
of the foregoing, of any encumbrance, setoff or claim and minus any
unsecured Indebtedness of Borrower.

 

The
foregoing shall supersede Section 3.2 of the Fourth Amendment and the “Liquidity”
covenant set forth in the Fourth Amendment shall no longer be of any force or
effect.

 

2.20                           Amendment and Restatement of
Section 13(d).  Section 13(d) of
the Agreement is hereby amended and restated to read as follows:

 

(d)  Other Indebtedness. Borrower or any
Guarantor shall fail to pay when due any Indebtedness or any other event occurs
which, under any agreement or instrument relating to such Indebtedness, has the
effect of accelerating or permitting the acceleration of such Indebtedness,
whether or not such Indebtedness is actually accelerated.

 

2.21                           Amendment of Section 13(f).  Section 13(f) is hereby amended to
add the following at the end of such section: 
“, provided, however, that, notwithstanding anything in this Section 13(f) to
the contrary, Borrower may liquidate, wind-up, dissolve or cease the operations
of MPC.”

 

2.22                           General Amendment.  The words “Indebtedness for Borrowed Money”
are herby changed to “Indebtedness” each time they appear.

 

3.                                       Representations and Warranties of Borrower.  Borrower represents,
warrants and covenants to Lender that:

 

3.1                                 Borrower knows of no Default
or Event of Default under the terms and conditions of the Loan Documents.

 

3.2                                 This Amendment constitutes a
legal, valid and binding obligation of Borrower, enforceable against Borrower
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors’ rights generally.

 

3.3                                 The representations and
warranties of Borrower set forth in Section 10 of the Credit Agreement are
correct in all material respects as though made on and as of the date of this
Amendment (provided, if a representation or warranty was made as of a specific
date, such representation or warranty was true and correct in all material
respects as of the date made).

 

3.4                                 Since the date of the last
financial statements delivered by Borrower to Lender, there has been no
material adverse change in the business, assets, liabilities (actual or
contingent), operations, condition (financial or otherwise) or prospects of
Borrower and its Subsidiaries taken as a whole or in the facts and information
regarding such entities as represented to Lender to date.

 

3.5                                 Except as set forth on Schedule
3.5 hereto, there are no actions, suits, investigations or proceedings
pending or to Borrower’s knowledge, threatened in any court or 

 

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before any arbitrator or governmental
authority that purport (x) to materially and adversely affect Borrower or
any of its Subsidiaries, or (y) to affect any transaction contemplated
hereby or the ability of Borrower to perform its obligations under the Loan
Documents.

 

3.6                                 Borrower is in material
compliance with all laws, including satisfaction of all tax obligations prior
to delinquency.

 

3.7                                 Borrower is in compliance
with all insurance requirements imposed upon Borrower under the Loan Documents.

 

3.8                                 Borrower is in compliance
with the negative covenants set forth in Section 12 of the Credit
Agreement, as amended herein.

 

4.                                       Representations and Warranties of Guarantors.  Each Guarantor by its
signature below represents, warrants and covenants to Lender that:

 

4.1                                 Such Guarantor knows of no
Default or Event of Default under the terms and conditions of the Loan
Documents.

 

4.2                                 This Amendment constitutes a
legal, valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors’ rights generally.

 

4.3                                 Since the date of the last
financial statements delivered by Borrower to Lender, there has been no
material adverse change in the business, assets, liabilities (actual or
contingent), operations, condition (financial or otherwise) or prospects of
such Guarantor taken as a whole or in the facts and information regarding such
Guarantor as represented to Lender to date.

 

4.4                                 Except as set forth on Schedule
3.5 hereto, there are no actions, suits, investigations or proceedings
pending or to Borrower’s knowledge, threatened in any court or before any
arbitrator or governmental authority that purport (x) to materially and
adversely affect such Guarantor, or (y) to affect any transaction
contemplated hereby or the ability of Guarantor to perform its obligations
under the Loan Documents.

 

4.5                                 Such Guarantor is in
material compliance with all laws, including satisfaction of all tax
obligations prior to delinquency.

 

5.                                       Continuing Validity.  Except as
expressly modified or changed by this Amendment, the terms of the Credit
Agreement, the Note and all other related loan documents remain unchanged and
in full force and effect. Consent by Lender to the changes described herein
does not waive Lender’s right to strict performance of the terms and conditions
contained in the Credit Agreement, the Note and all other loan and security
documents as amended, nor obligate Lender to make future changes in terms.
Nothing in this Amendment will constitute a satisfaction of the indebtedness
represented by the Note.

 

6.                                       Release.  Borrower
hereby releases, remises, acquits and forever discharges Lender and its employees,
agents, representatives, consultants, attorneys, fiduciaries, officers,
directors, partners, predecessors, successors and assigns, subsidiary
corporations, parent corporations, and related corporate divisions
(collectively, the “Released Parties”), from any and all actions and causes of
action, judgments, executions, suits, debts, claims, demands, liabilities,
obligations, damages and 

 

10

 

expenses
of any and every character, known or unknown, direct and/or indirect, at law or
in equity, of whatsoever kind or nature, for or because of any matter or things
done, omitted or suffered to be done by any of the Released Parties prior to
and including the date of delivery hereof, and in any way directly or indirectly
arising out of or in any way connected to the Credit Agreement (collectively,
the “Released Matters”).  Borrower
acknowledges that the agreements in this Section are intended to be in
full satisfaction of all or any alleged injuries or damages arising in
connection with the Released Matters.

 

Without
limiting the generality of the foregoing, Borrower hereby waives the provisions
of any statute that prevents a general release from extending to claims unknown
by the releasing party, including Section 1542 of the California Civil
Code which provides:

 

A
general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release,
which if known by him or her must have materially affected his or her
settlement with the debtor.

 

By
entering into this release, Borrower recognizes that no facts or
representations are ever absolutely certain and Borrower may hereafter discover
facts in addition to or different from those which Borrower presently knows or
believes to be true, but that it is the intention of Borrower to hereby fully,
finally and forever settle and release all matters, disputes and differences,
known or unknown, suspected or unsuspected; accordingly, if Borrower should subsequently
discover that any fact that Borrower relied upon in delivering this release was
untrue, or that any understanding of the facts was incorrect, Borrower shall
not be entitled to set aside this release by reason thereof, regardless of any
claim of mistake of fact or law or any other circumstances whatsoever.  Borrower acknowledges that Borrower is not
relying upon and has not relied upon any representation or statement made by
Lender with respect to the facts underlying this release or with regard to
Borrower’s rights or asserted rights.

 

This
release may be pleaded as a full and complete defense and/ or as a
cross-complaint or counterclaim against any action, suit, or other proceeding
that may be instituted, prosecuted or attempted in breach of this release.  Borrower acknowledges that the release
contained herein constitutes a material inducement to Lender to enter into this
Amendment and that Lender would not have done so but for Lender’s expectation
that such release is valid and enforceable in all events.

 

7.                                       Enforceability. 
Borrower represents, warrants and acknowledges that it has had the
opportunity to consult with independent counsel regarding the legal effects of
this Amendment, and that it is executing this Amendment of its own free will
and accord, for the purposes and considerations set forth herein.  Borrower hereby acknowledges that this
Amendment is binding and enforceable against it in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
or similar laws relating to the enforcement of creditor’s rights generally and
by general equitable principles.  Any law
or regulation that provides that the language of a contract shall be construed
against the drafter shall not apply to this Amendment.

 

8.                                       Miscellaneous.

 

8.1                                 Borrower acknowledges and
agrees that the execution and delivery by the Lender of this Amendment shall
not be deemed to create a course of dealing or an obligation to execute similar
amendments or substitutions of collateral under the same or similar
circumstances in the future.

 

8.2                                 This Amendment shall be
binding upon and inure to the benefit of the Borrower, and Lender and their
respective successors and assigns.

 

11

 

8.3                                 This Amendment shall be
governed by and construed in accordance with the laws of the State of
California.

 

8.4                                 This Amendment contains the
entire agreement of the parties hereto with reference to the matters discussed
herein.

 

8.5                                 If any term or provision of
this Amendment shall be deemed prohibited or invalid under any applicable law,
such provision shall be invalidated without affecting the remaining provisions
of this Amendment, the Credit Agreement, the Note or any other Loan Documents
or related documents.

 

8.6                                 This Amendment may be
executed in multiple counterparts, each of which shall be deemed to be an
original and all of which when taken together shall constitute one and the same
instrument.  The manual signature of any
party hereto that is transmitted to any other party or its counsel by facsimile
or electronic transmission shall be deemed for all purposes to be an original
signature.

 

12

 

IN WITNESS WHEREOF the
parties have executed this Amendment on the date first above written.

 

THE
UNDERSIGNED AGREE TO ALL THE TERMS AND CONDITIONS SET FORTH ABOVE.

 

BORROWER:

 

MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii
corporation

 

	
  By:

  	
  /S/ JOHN P. DURKIN

  	
   

  
	
  Name:

  	
  John P. Durkin

  	
   

  
	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /S/ RYAN L. CHURCHILL

  	
   

  
	
  Name:

  	
  Ryan L. Churchill

  	
   

  
	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
  LENDER:

  	
   

  
	
   

  	
   

  
	
  AMERICAN AGCREDIT, FLCA

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /S/ GARY VANSCHUYVER

  	
   

  
	
  Name:

  	
  Gary VanSchuyver

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  

 

THE SIGNATURES OF GUARANTORS APPEAR ON THE FOLLOWING PAGE.

 

13

 

GUARANTORS:

 

The undersigned Guarantors
hereby consent to, ratify and approve the terms, covenants, conditions and
provisions of the foregoing Amendment, agree that the guaranty(ies) executed by
them shall be extended to include the obligations of the Borrower under the
Credit Agreement as amended by this Amendment, and join in the release granted
by Borrower to Lender in the foregoing Amendment.

 

KAPALUA LAND COMPANY, LTD., a Hawaii corporation

 

	
  By:

  	
  /S/ JOHN P. DURKIN

  	
   

  
	
  Name:

  	
  John P. Durkin

  	
   

  
	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /S/ RYAN L. CHURCHILL

  	
   

  
	
  Name:

  	
  Ryan L. Churchill

  	
   

  
	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MAUI PINEAPPLE COMPANY, LTD., a Hawaii corporation

  
	
   

  
	
  By:

  	
  /S/ JOHN P. DURKIN

  	
   

  
	
  Name:

  	
  John P. Durkin

  	
   

  
	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /S/ RYAN L. CHURCHILL

  	
   

  
	
  Name:

  	
  Ryan L. Churchill

  	
   

  
	
  Title:

  	
  Member, Board of DirectorsExhibit 10.1

 

LOAN AND SECURITY AGREEMENT

 

This LOAN AND SECURITY AGREEMENT dated as of October 28,
2009 (the “Agreement”), is executed by and between PRIMORIS
SERVICES CORPORATION, a  Delaware
corporation  (the “Borrower”), which has its
chief executive office located at 26000 Commercentre Drive, Lake Forest,
California 92630, and THE PRIVATEBANK AND
TRUST COMPANY, (the “Bank”), whose address is 120 South LaSalle
Street, Chicago, Illinois 60603, Chicago, Illinois 60603.

 

R  E  C
I  T  A  L  S:

 

A.                                   The Borrower
desires to borrow funds and obtain other financial accommodations from the Bank
to provide for on-going working capital requirements and general corporate
purposes.

 

B.                                    The Bank will be lending
funds to the Borrower pursuant to Revolving Notes as described herein.

 

C.                                    The Revolving
Loans, as defined herein, shall be secured by a first priority security
interest in all the tangible and intangible property of the Borrower and each
of its Subsidiaries.  The Revolving Loans
shall also be secured by Guaranties and Security Agreements executed by each
Subsidiary of the Borrower in favor of the Bank.

 

D.                                    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.

 

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:

 

A  G  R  E  E  M  E  N
T  S:

 

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:

 

	
  Pricing Matrix

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  	
  Level IV

  	
   

  
	
  Total Senior Debt

  	
   

  	
  <0.50:1

  	
   

  	
  >0.50:1&

  	
   

  	
  >1.0:1&<

  	
   

  	
  >1.50:1

  	
   

  
	
  Balance Sheet Leverage
  Ratio

  	
   

  	
   

  	
   

  	
  <1.0:1

  	
   

  	
  1.50:1

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Base Rate Margin

  	
   

  	
  0.25%

  	
   

  	
  0.25%

  	
   

  	
  0.50%

  	
   

  	
  0.50%

  	
   

  
	
  LIBOR Margin

  	
   

  	
  2.00%

  	
   

  	
  2.25%

  	
   

  	
  2.50%

  	
   

  	
  2.75%

  	
   

  
	
  Letter of Credit Fee

  	
   

  	
  1.75%

  	
   

  	
  2.00%

  	
   

  	
  2.25%

  	
   

  	
  2.50%

  	
   

  
	
  Un-Used Fee A

  	
   

  	
  0.40%

  	
   

  	
  0.40%

  	
   

  	
  0.50%

  	
   

  	
  0.50%

  	
   

  
	
  Un-Used Fee B

  	
   

  	
  0.15%

  	
   

  	
  0.15%

  	
   

  	
  0.15%

  	
   

  	
  0.15%

  	
   

  

 

The
Applicable Margin as of the date hereof is Level II 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.

 

The
Base Rate Margin and the LIBOR Margin will be reduced by 25 bps if the Borrower’s
average deposit levels at the Bank exceed Ten Million and 00/100 Dollars
($10,000,000) in the previous calendar quarter.

 

“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 the prime rate 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.

 

“Base Rate Margin” shall have the meaning as
set forth in the Applicable Margin.

 

“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, net of sales, (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, (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, and (i) Fully FDIC-insured deposits (including
CDARS deposits) held at any FDIC-insured bank.

 

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

 

“Change in Control” shall mean if any party
shall own and control, directly or indirectly, more of the outstanding Capital
Securities of the Borrower than those Capital Securities that are owned and
controlled, directly or indirectly, by Brian Pratt.  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.

 

“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.

 

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

 

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

 

“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.

 

“Fixed Assets” shall mean land and buildings, motor vehicles,
furniture, office equipment, computers, fixtures and fittings, and plant and
machinery.

 

“GAAP” shall mean generally accepted
accounting principles as set forth from time to time by the Financial
Accounting Standards Board in its Accounting Standards Codification and the rules and
interpretive releases of the Securities and Exchange Commission under the
authority of federal securities laws 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.

 

6

 

“Guarantor” and “Guarantors” shall
mean, respectively, each of and collectively, the following Persons:  ARB, Inc.; ARB Structures, Inc.;
Cardinal Contractors, Inc.; Cardinal Mechanical, LP; Juniper Rock
Corporation; OnQuest, Inc.; Stellaris, LLC; and any other Person signing a
Guaranty.

 

“Guaranties” shall mean the joint and several
Guaranties executed by each domestic Subsidiary of the Borrower in favor of the
Bank.

 

“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.

 

7

 

“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.

 

“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.

 

“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 Fifteen Million and 00/100 Dollars
($15,000,000.00) which is a sub-limit of Revolving Loan A.

 

“Letter of Credit Fee” shall have the meaning
set forth in Section 2.1(j).

 

“Letter of Credit Maturity Date” shall mean
the maturity date as set forth in the Master Letter of Credit Agreement.

 

“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.

 

8

 

“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.

 

“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 Margin” shall have the meaning as set
forth in the Applicable Margin.

 

“LIBOR Rate” shall mean a per annum rate of
interest equal to LIBOR for the relevant Interest Period, plus the Applicable Margin 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.

 

9

 

“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.

 

“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.

 

“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.

 

“Notes” shall mean  the
Revolving Notes.

 

“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 10.8 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 9.4,
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.

 

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

 

11

 

“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 either
LIBOR plus the Applicable Margin or Base 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 including Revolving Loan A and Revolving Loan B.

 

“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 A” shall mean the Revolving
Loan in the amount of the Revolving Loan A Commitment.

 

“Revolving Loan B” shall mean the Revolving
Loan in the amount of the Revolving Loan B Commitment.

 

“Revolving Loan A Commitment” shall mean
Twenty Million and 00/100 Dollars ($20,000,000.00).

 

“Revolving Loan B Commitment” shall mean
Fifteen Million and 00/100 Dollars ($15,000,000.00).

 

“Revolving Loan A Maturity Date” shall mean October 28,
2012, 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 Loan B Maturity Date” shall mean October 27,
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 Loan Maturity Dates” shall mean
Revolving Loan A Maturity Date and Revolving Loan B Maturity Date.

 

“Revolving Notes” shall mean revolving notes
in the form prepared by and acceptable to the Bank, dated as of the date
hereof, each in the amount of the Revolving Loan A Commitment and the Revolving
Loan B Commitment and maturing on the Revolving Loan A Maturity Date and the
Revolving Loan B 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.

 

12

 

“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.

 

“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 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.

 

13

 

“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.

 

“Un-Used Fee A” shall have the meaning set
forth in Section 8.23 hereof.

 

“Un-Used Fee B” shall have the meaning set
forth in Section 8.24 hereof.

 

“Un-Used Fees” shall mean the Un-Used Fee A
and the Un-Used Fee B.

 

“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.

 

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.

 

14

 

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.

 

(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 Commitment. The basic terms of the Revolving
Commitment are as follows:

 

(a)                                  Amount.  The amount of
the Revolving Commitment is Thirty-Five Million and 00/100 Dollars
($35,000,000.00) (the “Revolving Commitment”), but that amount may be reduced
and terminated pursuant to the provisions of this Agreement.  The Revolving Loan A Commitment is Twenty
Million and 00/100 Dollars ($20,000,000.00) and the Revolving Loan B Commitment
is Fifteen Million and 00/100 Dollars ($15,000,000.00).

 

15

 

(b)                                 Term.  The Revolving
Loan A Commitment shall terminate on the Revolving Loan A Maturity Date and the
Revolving Loan B Commitment shall terminate on the Revolving Loan B Maturity
Date.

 

(c)                                  Revolving Loans. 
Pursuant to the terms of this Agreement and the Revolving Notes, Bank
agrees that so long as the Revolving Commitment remains in effect, to grant
Borrower such Revolving Loans as Borrower may from time to time request (“Revolving
Loans”).   The Revolving Loans shall be
used by the Borrower for the purpose of working capital and general corporate
purposes.

 

(d)                                 Revolving Note. 
The Revolving Loans shall be evidenced at all times by Revolving Notes
executed and delivered by the Borrower, payable to the order of the Bank in a
principal amount equal to the dollar amount of the Revolving Loan A Commitment
and the Revolving Loan B Commitment as in effect at the execution and delivery
of the Notes and being in the form prepared by and acceptable to the Bank (as
amended, restated, supplemented or otherwise modified from time to time, the “Revolving
Notes”).

 

(e)                                  Revolving Loan Interest and Payments. 
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 Dates. 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.

 

(f)                                    Revolving Loan Principal Payments.

 

(i)                                     Revolving Loan Mandatory Payments. 
All Revolving Loans hereunder shall be repaid by the Borrower on the
Revolving Loan Maturity Dates, 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.

 

16

 

(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.

 

(g)                                 Revolving Loan Requests. 
A Revolving Loan is properly requested if requested orally or in writing
not later than 2:00 p.m. central of the Business Day upon which that
Revolving Loan is to be made.  Each
request for a Revolving Loan shall of itself constitute, both when made and
when honored, a representation and warranty by Borrower to Bank that Borrower
is entitled to obtain the requested Revolving Loan.  Bank is hereby directed, absent notice from
Borrower to the contrary, to disburse the proceeds of each Revolving Loan to
Borrower’s general checking account with Bank. 
Bank shall have no duty to follow, nor any liability for, the
application of any proceeds of any Revolving Loan.

 

(h)                                 Condition – No Default. 
In addition to the provisions contained in the Revolving Notes, Borrower
shall not be entitled to obtain any Revolving Loan under Section 2.1(c) herein
if:

 

(i)                                     any default under this Agreement or any
other Loan Document shall then exist or would thereupon begin to exist;

 

(ii)                                  any representation or warranty made
herein or in any Loan Document shall have ceased to be true and complete in any
material respect; or

 

(iii)                               there shall have occurred any Material
Adverse Effect on Borrower’s financial condition, properties or business since
the date of Borrower’s most recent financial statements, if any, furnished to
Bank pursuant to Section 8.8.

 

Each credit request, both
when made and when honored, shall of itself constitute a continuing
representation and warranty by Borrower that Borrower is entitled to obtain,
and Bank is obligated to make, the requested Revolving Loan.

 

(i)                                     Amount.  No Revolving
Loan shall be made if, after giving effect thereto, the aggregate unpaid
principal balance of the Revolving Loans would exceed either the amount of the
Revolving Commitment minus the Revolving Loan Availability.

 

2.2.                              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

 

17

 

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.

 

2.3.                              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.

 

18

 

(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

 

19

 

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 shall pay the Bank
the Un-Used Fee A and the Un-Used Fee B as per the Applicable Margin, which
Un-Used Fees 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 December 31, 2009, and on the Revolving Loan
Maturity Date.  Issued but undrawn
Letters of Credit will count as utilization for the purposes of calculating the
Un-Used Fees.

 

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

 

20

 

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 Section 3.7(c).

 

(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.

 

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.

 

21

 

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 Notes.  Revolving Notes 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 Agreement.  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.

 

22

 

(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)                                     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.

 

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

 

(l)                                     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.                              Condition Subsequent.

 

(i)                                     Guaranties and
Security Agreements.  The
Borrower shall cause any and each domestic Subsidiary it acquires after the
date of this Agreement to execute a Guaranty and Security Agreement in favor of
the Bank and in form prepared by and acceptable to the Bank.

 

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 Material 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.

 

23

 

Section 4.    NOTES EVIDENCING LOANS.

 

4.1.                              Revolving Notes.  The Revolving Loans shall be evidenced by the
Revolving Notes.  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.

 

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

 

24

 

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.

 

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 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”):

 

25

 

(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

 

(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;

 

26

 

(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

 

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
any 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.

 

27

 

6.2.                              Other Collateral.  In addition, the Obligations are also secured
by the Guaranties, Security Agreements and, if required pursuant to Section 12.5
hereof, 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.

 

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 of Five Hundred Thousand and 00/100 Dollars
($500,000.00), 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.

 

29

 

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 3.    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 Delaware, 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 XXXXXXX.  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.

 

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.

 

30

 

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, 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.

 

31

 

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.  A schedule of all litigation which is not
covered by the Borrower’s insurance policies is attached hereto as 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 Section 8.8.

 

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 

 

32

 

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.

 

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.

 

33

 

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 8.3(d),
all Deposit Accounts and operating bank accounts of the Borrower and its
Subsidiaries are located at the Bank.

 

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.

 

34

 

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
and Security Agreement in favor of the Bank in form prepared by and acceptable
to the Bank.

 

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.

 

35

 

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.

 

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.

 

36

 

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.

 

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

 

37

 

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 ninety (90) 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, 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; and
(ii) financial forecasts, budgets and updates thereto and such other
information (including nonfinancial information) as the Bank may request, in
reasonable detail.

 

(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.

 

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.

 

38

 

8.9.                              Guarantor Financial
Information.  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.

 

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, and (ii) 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.

 

If
the Borrower ceases to be publicly traded, then 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.

 

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.

 

39

 

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.

 

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.                        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.

 

40

 

8.21.                        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.

 

8.22.                        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
and Security Agreement in favor of the Bank and in form prepared by and
acceptable to the Bank.

 

8.23.                        Un-Used Fee A.  The Borrower shall pay the Un-Used Fee A on
the unused portion of the Revolving Loan A Commitment as per the Applicable
Margin in accordance with Section 2.4 hereof.

 

8.24.                        Un-Used Fee B.   The Borrower shall pay the Un-Used Fee B on
the unused portion of the Revolving Loan B Commitment as per the Applicable
Margin in accordance with Section 2.4 hereof.

 

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)                                          On balance sheet Debt
described on Schedule 9.1 (and any extension, renewal or refinancing
thereof subject to the prior written approval of the Bank), provided that total
Debt for Capital Expenditures, previously financed Capital Expenditures or
previously financed or re-financed Fixed Assets will not exceed Forty-Five
Million and 00/100 Dollars ($45,000,000.00);

 

41

 

(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); and

 

(h)                                       Subordinated Debt in an
amount mutually acceptable to the Borrower and the Bank and on terms acceptable
to the Bank.

 

9.2.                              Encumbrances.  Except as set forth on Schedule 9.2,
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;

 

(c)                                  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;

 

(d)                                 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;

 

(e)                                  Using the
definition of investments set forth in Section 9.3(d) hereof, investments
in Born Heaters Canada or any Guarantor;

 

(f)                                    Subject to the
aggregate limitations set forth in Section 9.3(d) hereof and
using the definition of investments set forth in Section 9.3(d) 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);

 

42

 

(g)                                 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.;

 

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

 

(i)                                     Deposits and
Investments held at the Bank; and

 

(j)                                     Fully
FDIC-insured deposits (including CDARS deposits) held at any FDIC-insured bank.

 

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.

 

9.4.                              Transfer;
Merger; Sales.  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.

 

43

 

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.

 

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 any 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.

 

44

 

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.  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.

 

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 a Tangible Net Worth of
Eighty-Five Percent (85%) of the Tangible Net Worth as of the most recent
quarterly reporting period with such Tangible Net Worth to be in an amount no
less than Forty-Nine Million and 00/100 Dollars ($49,000,000.00).

 

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 and as of the end of each of its fiscal quarters,
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.  On a
rolling four quarter basis and as of the end of each of its fiscal quarters,
the Borrower shall not incur Capital Expenditures in an amount greater than
Twelve Million and 00/100 Dollars ($12,000,000.00) in the aggregate in any one
Fiscal Year.  However, for Fiscal Year
2009, up to Ten Million and 00/100 Dollars ($10,000,000.00) of Capital
Expenditures associated with (i) the Borrower’s purchase of a yard near
Los Angeles to house certain pieces of equipment and (ii) the Borrower’s
purchase of a rock quarry and related equipment shall be excluded from this
Capital Expenditure Limitations covenant.

 

45

 

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 Revolving 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.

 

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 following written notice of default from the
Bank.

 

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.

 

46

 

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.

 

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.                        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.

 

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

 

11.11.                  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.

 

11.12.                  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.

 

47

 

11.13.                  Change of Control.  The occurrence of a Change of Control.

 

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

 

48

 

 

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.

 

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.

 

49

 

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.

 

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;

 

50

 

(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;

 

(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.

 

51

 

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.

 

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

 

52

 

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.

 

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.

 

53

 

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.

 

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.

 

55

 

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.

 

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.

 

56

 

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 Services
  Corporation

  
	
   

  	
  26000 Commercentre Drive

  
	
   

  	
  Lake Forest, California
  92630

  
	
   

  	
  Attention: Peter J.
  Moerbeek

  
	
   

  	
  John
  M. Perisich, Esq.

  
	
   

  	
   

  
	
  To the Bank:

  	
  The PrivateBank and Trust
  Company

  
	
   

  	
  120 South LaSalle Street

  
	
   

  	
  Chicago, Illinois 60603

  
	
   

  	
  Attention: Steve
  Trepiccione

  
	
   

  	
  Managing Director,
  Construction and Engineering

  
	
   

  	
   

  
	
  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.

 

57

 

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

 

58

 

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.

 

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
  SERVICES CORPORATION,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter J. Moerbeek

  
	
   

  	
   

  	
  Peter J. Moerbeek

  
	
   

  	
   

  	
  Executive Vice President,
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Agreed and accepted:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  PRIVATEBANK AND TRUST COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steve Trepiccione

  
	
   

  	
   

  	
  Steve Trepiccione

  
	
   

  	
   

  	
  Managing Director,
  Construction and Engineering

  

 

60

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